H.—l6.

From a balance-sheet point of view—that is to say, taking into consideration all charges for interest on capital, sinking fund, and depreciation—the position is that on the departmental accounts we are still approximately £18,000 to the bad. We can now meet ordinary annual expenditure and depreciation charges, but cannot meet interest on capital and sinking fund. The main avenues of loss are as follows : (a) Ship survey, £5,000 ; (b) inspection of machinery, £7,000 ; (c) Meteorological Branch, £6,000. As to (a) and (6), revised scales of charges are in course of preparation with a view to more nearly equalizing the expenditure ; as to (c), it is understood that this branch will probably be transferred to the new Department proposed to be constituted to embrace a number of scientific branches. The results obtained in connection with Westport Harbour Account are considered particularly satisfactory in view of the facts that the cost of annual overhaul of the dredge " Eileen Ward " was particularly heavy, amounting to some £3,000 ; that the dredge " Mawhera " was chartered from the Greymouth Harbour Board for special, work from the beginning of February ; and, further, that interest at 5J per cent, on Treasury advances to the account amounting to £141,000 was charged to the account for the first time since the Department assumed "control of the harbour. The surplus of £5,630 for the year has been transferred to a Harbour Maintenance Reserve Account. It has been deemed advisable to establish such a reserve within the Harbour Account because expenditure in one year may, for many reasons, considerably exceed that of another year. Dredge-overhaul is a case in point ; the necessity to charter the " Mawhera " for dredging the berthages and swinging-basin is another. Similarly, the export of coal is always liable to considerable fluctuation from causes outside our control. The mining dispute in 1923-24, which practically stopped the export of coal for seventeen weeks, is an instance of fluctuation of revenue. The creation of a Harbour Maintenance Reserve Account will assist to stabilize results and provide a fund from which harbour improvements may be effected. A loan of £30,495 was paid off during the year. The surplus of £6,788 from sinking fund in respect of the £150,000 loan which was repaid during 1924-25 was utilized for this purpose, and the balance, £23,707, was met out of surplus funds in the Harbour Account. I consider that the Department's attitude with regard to Westport Harbour and the district it serves should be exactly the same as that of a Harbour Board —which, in plain words, means that the Department is not entitled to use the Harbour Account as a means of profit-making. When the Department took the concern over it was in a bankrupt condition. The harbour must carry its own burdens. Although the accounts are now showing a surplus, it is necessary to enlarge the reserve before it can safely be asserted that the account is financially stable, and this for the reason that the harbour lives on coal-export. Many causes entirely outside the Department's control may at any time throw the results from surplus to deficit. Export of coal is showing marked increase at present, and if that is maintained for a period the Department will be in a position to make the port still more attractive to shipping, and to reduce the account's indebtedness to Treasury in respect of advances made in past years. Balance-sheet. The following statements of expenditure and revenue, which take into consideration interest, sinking fund, and depreciation charges, show the position over the period 1921-22 to 1925-26 of general departmental accounts and Westport Harbour Account : —

EXPENDITURE.

3

Branch. 1921-22. 1922-23. \ 1923-24. 1924-25. 1925-26 I £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. Head Office .. .. 10,728 17 3 9,612 2 8 8,574 3 2 9,292 7 4 9,626 13 9 Harbours .. .. -■ 3,585 18 2 4,826 13 2 3,739 17 5 3,921 2 11 4,295 13 3 Lighthouses .. .. 31,409 15 1 26,995 19 5 25,302 19 4 26,823 6 5 24,220 2 2 Meteorological .. .. 3,857 2 3 5,374 0 3 5,572 6 2 5,863 19 2 6,124 12 6 Mercantile Marine .. .. 16,292 11 0 15,150 17 11 16,585 15 1 17,896 11 0 24,626 5 5 Inspection of Machinery .. 28,778 10 10 27,015 0 0 25,802 1 2 26,124 16 11 20,793 2 9 Fisheries .. .. 6,068 6 0 4,545 3 2 3,743 11 8 2,890 13 10 3,179 2 6 Government Steamers .. 37,199 5 2 21,697 19 6 22,819 8 9 21,837 5 4 24,309 19 11 . Miscellaneous Services .. 4,239 6 9 2,655 3 8 3,939 7 5 1,734 3 1 2,189 17 10 Grants and Subsidies .. 4,626 7 8 1,510 0 0 900 0 0 150 0 0 540 0 0 Depreciation .. .. 7,826 13 10 8,035 4 9 7,911 18 8 8,844 18 9 8,862 19 6 Interest on Capital .. 21,007 10 9 15,716 7 3 17,471 16 8 17,737 15 7 17,811 11 0 Totals—General Accounts .. 175,620 4 9 143,134 11 9 142,363 5 6 143,117 0 4 146,580 0 7 Westport Harbour Account .. 63,950 1 10 50,738 17 5 46,619 1 11 44,666 14 0 51,909 4 11 Totals .. .. J 239,570 6 7 193,873 9 2 188,982 7 5 187,783 14 4 198,489 5 6