B.—l [Pt. ll].

Schedule B.

Schedule of breaches of law passed subject to validation of irregularities :— Auckland Electric-power Board —Mortgage transaction. Huntly Town Board—Erection of shops. Lawrence Borough —Excess unauthorized. Lower Hutt Borough—Maintenance cemetery. Masterton Trust Lands Trust—Overdraft. Mount Eden Borough—Erection kiosk on Domain. Nelson City—Breach of section 3 (2), Local Bodies' Loans Act. Nelson City—Loan raised in excess of authority. Opotiki County —Preliminary expenses wrongly paid out of loan. Orton Drainage Board—Chairman's honorarium. Otorohanga County—Debentures sold at a discount. Southland High School—Breaking-up ceremonies. Waitomo County—Hire purchase of plant—preliminary expenses wrongly paid out of loan. Fire Boards —Conference expenses. Rabbit Boards—Chairmen's honoraria. Expenditure not covered by Annuai. Appropriation. In connection with the control of expenditure by Parliament it appears necessary to draw attention to the large proportion of the yearly expenditure of the various accounts which is now exempt from annual appropriation, a great proportion of which is not even included in the estimates placed before Parliament. In England that part of the expenditure which is authorized by permanent or continuing statutes, and is exempt from annual appropriation, includes only the charges of the national debt, payments to local taxation accounts, the King's Civil List, and a number of special salaries, annuities, and pensions, including part of the expenses of the Courts of Justice. (See " The System of National Finance," by E. Hilton Young.) Durell, in his book, " Parliamentary Grants," states that, as such charges are not automatically brought under the review of Parliament, there is a disinclination to make such permanent charges in any cases which could be provided for without detriment by annual vote. He also mentions that such charges have to be included each year in the Budget statement, though no vote is required. These restrictions on the use of permanent appropriations appear to have been considerably relaxed in New Zealand, and I cannot find that there is any definite principle regulating the class of expenditure which should be exempted from annual appropriation. A comparison of the expenditure covered by annual appropriation with that not so covered for the year ended on 31st March, 1928, discloses the fact that the amount of expenditure for the above year not subject to annual appropriation exceeded £31,000,000 out of a gross total of £57,000,000, while of this amount over £11,000,000 was expended without any amount having been submitted to Parliament by Departments in their estimates. These figures are, of course, subject to adjustment, but are sufficient to show (1) that a very large proportion of the annual expenditure is governed by permanent authority ; (2) that a large porportion of such expenditure is not included in the permanent charges of the annual estimates ; (3) that the principle of parliamentary control of expenditure by means of the annual appropriations is being seriously weakened. In exemplification of what I have said above, I might point out that there appears to be no good reason why such services as the expenditure on school buildings or on railways improvements, which are purely services of an exactly similar nature to other services which are covered by annual votes under the Public Works Fund, should not be subject to the control of annual appropriations ; nor is there any apparent reason why the expenditure on works such as the Hauraki Plains settlement, Rangitaiki land drainage, and swamp-land drainage should be exempt from such control, or why such expenditure should be made without any amount having been placed before Parliament in the estimates for the year. Repayment op the Public Debt Act, 1925. Under the operation of the Repayment of the Public Debt Act, 1925, public-debt securities of a nominal value of £2,831,563 13s. 3d. had at the 31st March, 1928, been redeemed and cancelled at a cost of £2,808,056 3s. Bd. These transactions have effected an annual saving of interest to the Consolidated Fund equal to the difference between 3£ per cent, (fixed by the Act) and the rate which was payable on the securities redeemed. The following statement shows the rate of interest that was payable on the redeemed securities, and indicates that an annual saving of interest to the Consolidated Fund amounting to £39,592 os. 4d. will be effected as a result of the redemptions to the 31st March, 1928

XIV

Nominal Value of Securities redeemed. Rate Total Cost Annual Saving of Interest. Tota i to 31st March, v 1Q97 „„ j Total to of Redemptions. in Interest. 1927. * ear ; 31st March, 1928. Per Cent. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. 4 163,842 13 2 240,211 0 1 404,053 13 3 396,495 3 8 2,020 5 4 4£ 871,550 0 0 9,300 0 0 880,850 0 0 865,472 5 0 8,808 10 0 5 7,700 0 0 750,300 0 0 758,000 0 0 757,446 5 0 11,370 0 0 51 300,500 0 0 .. 300,500 0 0 300,482 10 0 5,258 15 0 5J 13,900 0 0 .. 13,900 0 0 13,900 0 0 278 0 0 6 474,260 0 0 .. 474,260 0 0 474,260 0 0 11,856 10 0 1,831,752 13 2 999,811 0 1 2,831,563 13 3 2,808,056 3 8 39,592 0 4