PUBLIC TRUST.

Dominion, Volume 6, Issue 1734, 26 April 1913, Page 6

PUBLIC TRUST.

COMMISSION REPORTS. SUGGESTED REFORMS. \ MANY DEFECTS FOUND. • y — STAFF OVERWORKED AND UNDERPAID. Tho roport of tho Royal Commission f set up by tho present Government to in- ' quire into tho working of the Public Trust Offico was made publio yesterday. The commission consisted of Messrs. A. Macintosh, of Wellington, and ,J. H. iHosking, K.C., of Dnnedin. The Commission was appointed to in- ' quire into a report upon the working of' ; the Public Trust Office and to ascertain: f'(a) Whether the. estates in the . bands of ; the Publio Trustee are efficiently administered. . Jb) Whether the moneys controlled 1 by the Publio Trustee are satisfactorily iri- ■ vested. , (c) Whether the realisations are properly conducted. (ll) Whether the affairs of tlie members ; of tho Nativo race, entrusted to tho Public Trustee should be separated from the Publio Trust Office aiid man-

aged'by a board or a trustee specially appointed for the purpose. te) Whether the mothods of book-keeping : and accountancy adopted by the Pub-' lie Trustee aro satisfactory and in accordance with proper business methods.. ; tO Whether the present condition'of the Public ■ Trust Office Board is satisfactory. ./ The Commissioners were further directred to report generally upon any matters which came under their notice and to Ijnnke any suggestions which in their opint ion would teud to the greater efficiency W the Public Trust. Office. T Heads of_ the various Departments in "the head office were first interviewed- and ''afterwards the, Commissioners took the •evidence.of the officials they thought it desirable to examine. '• Communications • relative to the inquiry were invited fro'm >any.member of the staff. A committeo ot six furnished statements on behalf of '? J", 11101 staff., A number of persons aiot. belonging, to.the staff were also examined and the. office furnished various • ' • . j A telegram was sent to the district manpagers ot the Public Trust Office inviting particulars as to., whether the j stair of each office was sufficient as regarded numbers and competence," also .particulars as to any complaints, during the past five years, by third parties. .District managers were also requested to .ftate whether delays occurred in correspondence with the head office or whether causes of complaint existed, i Communications were Teccived ,bt the' Commissioners from the following Law jbocieties:—Auckland. Ilawke's Bay, Tarataaii,. Nelson, Canterbury.. Sir ' Arthur wuinness and others wrote on behalf of , th ®, P r » ctl tio?«rs of Greymoiith. , ihe Commissioners personally heard representatives on behalf of the New ZeaIrfot 'law. Socfe^ and: th ° Wellin S ton Dis-. . Letters were received from various members; or the public complaining of malf a<Lmmistration and remissness in relation to estates. Ihe conclusions of the ComJmissionersm' some ; of -.these cases have fljeen embodied m a memorandum which is p 3iot attached to tao report,

:>'• Methods.of Investment. 1 . As to the first Ueacl.of inquiry, "Whether estates m tho hands ,of tho 'Public .Trustee are efficiently administered," the Lommissionera exclude f T om this head Native trusts, which.- arb dealt with separately. 'As regards tho investment of trust Jtunds, both on public and private account, tho Commissioners state that the ;methods adopted in> making 1 .investments aiul in tho, collection of income and revenue, aro eminently efficient. Efficiency jn tlio ixractacal work of administering ts- . lates, it is pointed out, must bo dependent Upon the business capacity, judgment, and energy of lndivKhiafaistrict managers and ■agents, and the recommendations made bv Jiim to the head office for considerations .lJio head. office is the advising and accounting body. 'Tho Commissioners stato that toy -answer the question on the ■ basis that they havo reviewed only a very (small fraction of all the estates that' ore, Kjr have been, in tho hands of the Public QYustee. -Tho following table shows tho increase of business from year to year in the years indicated:—

' T -Th® number of well-founded complaints, St is.stated, is small in comparison with itihe number of estates administered.' As a : Ret-off to complaints, tho Public Triisteo letters of thanks and apnrecialion from various clients.

Greater Efficiency Possible. 1 At the same time, the Commissioners 'Tidd, having regard to the insufficiency of <thes_taff and -,to the varying business capacities of tho agents (in the back-blocks the. local policeman is the realising agent ■for small estates) they, cannot say that :tthe administration' is as efficient as it | could be made, j ! -is an evidence of, careful • administration the Commissioners append to their [Teport a table showing that only ,£2ll has [been paid by tho Public Trust Office the, last seven years as compensation for losses caused to estates. ' Delays. ,"Both as between head office and its agencies aid as regards third parties," the report states, "delay in answering ! correspondence and in rendering accounts lara serious, and existing defects which (cannot be denied. These, are duo largely rto the insufficient manning ,of the skilled pepartmcnts. These defects arej we are assured, in course of removal, but while rhey exist they cnunot but impair effluent administration." i A further <!cfect, tho report continues, P v hich will doubtless be to some extent .Temoved by-, the appointment of inspecting, officers (Mr. Barnett being the first), as the insufficient inspection of the various jhouso and other properties under tho offico i ' "Subject to the foregoing remarks," tho state, "it can be said with Confidence for the assurance of those who jliavo or propose to liave dealings with the Public Trust that the offico system and methods provide with the greatest' care for safeguarding, controlling, and scrubulously accounting for any estate placed ,ln its charge."- t . ' Realisations and Investments. The Commissioners express tho opinion £hat realisations are carried out on proper business line 9 consistently with tho iduties of trustees. Regarding investments the Commissioners state that testing tho character of Vtho securities by the cases oE tho exercise pi the power of sale or of entry into possession, or legal proceedings for the recovery of pnnoipal or interest during, tho past five years, the Te3ulfc id in the (highest degree favourable to the office. ■There are six securities treated as doubtful, the total sum represented by them being £&90. In those coses tho securities have diminished in value, but still flhow a margin except in one case. "One observation requires to be added," the report states, "namely, that the Public Trustee did not, we think, take as parly as he might have dono advantage of . tho higher market rate of interest which has prevailed for the past twelve months and more. Ho continued to lend at 5 per cent per annum until January 21 last. • • . The Government Insurance Commissioner did not raise his rate to 5J per cent per annum before that date. . . . Sub-lr-ct to the foregoing observations we find that the moneys controlled by the Public Trustee are satisfactorily invested."

Book-keeping and Accounting. The Commissioners find that the system ,f book-keeping and accounting in the Public Trust: Offico is, on the whole, well

caloulated to ensure accuracy and reasonable expedition. Public Trust Office Board. The Public Trust Office Board consists, accordiug to statute, of the Minister for Finance, the Native Minister,- the Solici-tor-General, the Government Life Insurance Commissioner, the Surveyor-General, the Public Trustee, nnd ono or moro of the following officers:—The ValuerGeneral, the Superintendent of Stuto Advances, the Under-Secretary for Lands. Threo members form a quorum. Tlio Commissioners state that tlio board meets once a week, and is attended' with regularity by tho Government Insuranco Commissioner and the State , Advances Superintendent. The Surveyor-General's attendance is infrequent 510 Minister ever - attends, nor does the SolicitorGeneral. Tho board invariably acts upon the recommendation of the Public Trustee as to whether ho shall accept any proposed appointment. Tho Commissioners recommend that the board be strengthened by including the VainerGeneral and two members of wide business knowledge and experience, who shall deal not only with such important matters as advances, investments, and acceptance of trusts, but with questions of difficulty and general policy. Tho. members who. now attend the meetings, it is stated,- do admirablo work, but members from outside tli'e service would bring the offico moro into touch with tlio public. One of tho additional members should bo • a person experienced in matters relating to farming and stock. Tho addition of non-service members would enable "moro business of a general character to be brought before the -board, and provision should be made, the report states, for sub-committees of the board, of which the Public Trusteo ihonld always be one, fa as to enable appropriate business to bo delegated to tho non-servico members. Great care and discretion, it is submitted, should bo exercised in selecting outsido members, and thoy should bo bound to secrecy to the same extent as the Public Trusteo himself.' - It would also be necessary to attach some remuneration to the position. In support of tho proposal to appoint outside members,' it is pointed out that holilers of the office of Publio Trnsteo have, so far, with ono exception, been selected from the legal profession.

Native Affairs.: ' Regarding administration of the affairs of the members of tlie Native race, the Commissioners express ■ the opinion that questions arising out of the administration of the West Coast settlement reserves should not bo left to be dealt with by/the ■ Public Trustee alone. The administration of the' reserves, it is suggested, should be in touch with the Native and Lands Departments, so that a policy consistent ,with: the operations of thoso Departments as regards Hatives generally should bo maintained. i '"'ln connection with the reserves other than the West Coast settlement," the report remarks, "thero is a special board, constituted under the Native Reserves Act, consisting of the Public Trustee an! the othor member of the Public Trust Board and two Natives appointed b}; the Governor. This board.is a mere farce. It, meets infrequently. t Its last meeting was over a year ago. Former metings were held as, followln November, 1905, June and December, 1906, June, July, and November,. 1907, May, 1908, February and August, 1909, none in 1910, and one ih September, 1911. Of tho two native members, who attended the meeting in March, 1912, both attended the in September, 1911, but neither wa9 present at any other meeting.on or subsequent to 1905.' Each Native receives a guinea for his attendance, and merely registers the recommendation of the Public Trustee. As the Native Minister has never attended, and the Under-Secretary for Lands is not a member of the board, it is plain that the Public Trustee is altogether'out of touch with the Departments that' are most interested in his administration."

The Commissioners submit that there is necessity for some change in the administration of the Native reserves. . Almost all tho officers of the Public Trust Department who gave evidence, it is states', expressed the opinion that it would be a good .thing ,if Native .matters jrere removed ifirdrii the office/" It 'is urged that' Native business has not paid, and that the presence of Native business has reduced the amount of voluntary business. The annual amount. received by tho Public Trustee for-adininisteriiig all Native : reserves is ,£38"0, and tho annual expenses in connection with tho administration are estimated at .£3480. Tho Commissioners rccommend that tho whole of the Native reserves and "their administration should be vested In a board consisting of the Under-Secretary for Native Affairs, the Under-Secretary for Lands, and two other members appointed by the Governor, one a Native and tho other a European experienced in' agricultural 'matters. The Commissioners disagree with a suggestion that a new Maori Land Board should be set up to deal with the West Coast settlement lands.

Tho Staff—Overworked and Underpaid.' "Tho staff, which generally may bo described as bright, intelligent, and capable," the report proceeds, "is insufficient in. numbers in the skilled Departments, and is greatly overworked. The members of it are, inimany instances, and particularly in tho skilled departments, underpaid. Furthermore, tho remuneration attached to tho higher offices is'also, in our opinion, inadequate to the responsibilities imposed. "That tho staff is undermanned and overworked i 9 evident from an estimate of the amount of overtime for the twelve months ending May 31 last, as ganged by the amount paid on that account. (Note —'Is. Gd. is allowed for tea-money per night of two hours.) -. £ s. d. Head Office: Tea money IBS 16 0 VOvertime (Is. Gd. per hour) > 388 19 6 Agencies: Tea money ....' 17 17 0 Overtime Oil ' <£584 1G 7 "Subject to a slight variation because of the higher rate of overtime in the case of senior officers these payments indicate 10,552 hours overtime, or 1507 wdrking days, or •11 men for hours nightly throughout the year. ; , "To this an addition, of 5000 hours (for which no payment is made) can, as the evidence shows, -be included,' being for broken and- excess time. With- this addition we have:— "15.552 hours overtime, or "2221 working days, >'or "20 men -for 2J hours nightly through- ' out- the .year. • "Ono officer worked sixteen months' time, counting by hours, in a period of twelve months." _ I The abssnco of skilled officers and of understudies to them is attributed to want of provision in the past. . . , The average rate of payment instead of increasing with the growth of business, has fallen, and is now lower than in other Departments of the Public Service, as shown in the following table:— Publio Trust Average. , ■ £ s. d. ; 1901 181 13 0 per annum 1 1009 ' I 164 6 0 per annum 1912 146 0 0 per annum 1 Agricultural Department. .£3OO per annum. , ' Experts, ,£392 per annum Lands and Survey Department, J2191' per annum, "Whole Service. .£162 per annum. . "One striking case of underpayment is that of the cashior. His total receipts over tho counter for tho half-year ending September 30.last were over half a million. Likewise his payments over the counter for tho same period. The total transactions for the whole year numbered over 107,000. His salaTy is <£170, with an allowance of ,£2O. We aro of opinion that the salaries of the staff require" readjustment, and should, in ■ individual cases, bo made moro commonsurate with the work required of them if the best men are to be retained in the service. "It is, we think, unfortunate, that tho question of increased payment of the staff was notjaken into account before the re- I duction in the office charges took place." The staff, tho - Commissioners recommend, should now bo augmented by at least twenty cadets, to be specially trained in the skilled departments. Decentralisation. Tho appointment of Deputy Trustees (under the Act of 1912) at tho four ccntres, tho Commissioners consider, will save much delay and consequent dissatisfaction. Thoy express doubt, however, as to ] _whether the wvbemo will tend to relieve] • „x r"

tho Head Office to tho extent expocted. "Under certain conditions," tlio report continues, "this is possible, but tlie serious and sometimes dangerous element of responsibility bulk 9 largely in connection with tho creation of deputies. Moreover, in order to carry it out, certain skilled officers will have to be taken from tho Head Office to supplement the brandies nud nil estates must sooner or later coino under review at the Head Office, although in a summary form. Constant inspection on.bdialf of the Head Office is a necessary adjunct to the scheme." Country Agents. The position of country agents is reviewed at length. Tho Commissioners criticise tho system of appointing asejils, pointing out that, in a sense, the goodwill of a portion of tho Public Trust Office is transferred and belongs to tho agent for life. "This is a position," tho Commissioners remark, ''which we think should nover hnvo been allowed to grow UJ). In tho caso of some of tho smaller agents," the report proceeds, "tho evidence given to lis is to the. effect that several are sadly lacking in knowledge of tho requirements of tho office, and that their methods want to bo considerably improved'; also, 'that tlio offico has to spoon-feed the smaller agents almost.' It will be an advantage when tho book of instructions to agents is brought up to date. The present handbook was published m 1896, nnd, amongst other things, refers to legislation that has long been repealed. Wo understand that a now set of instructions is in course of preparation. According to tho evidenco before us in relation to 0110 case it appears essential that there should be a rigid nilo that the appointment of an agent, when ho does not thereby become a member of tho Public Service, should not be made without consulting the Public Trustee, and certainly not in the faco of a protest oil the part of tho Trustee." Legal Work. Begirding tlio legal work of ffife' office, tho Commissioners recommend:— (1) That tho office solicitor and his staff sliould bo confined to tho indoor work of tho office. (2) That third parties and others requiring legal advice should not bo allowed to seek it from tho office staff at the expense of the Common Fund. (3) That tho office solicitor's appearanco in Court should be confined to separate matters originating in the offico, and for these an adequate fee should bo charged to the estate to which the matter belongs. Otherwise the work is being done for that estate at the expense of the beneficiaries as a whole through the Common Fund. (4) That'*ie>Jegal work should be decentralised, instead of being more and moro centralised' at Wellington, This will obviously bo necessary as a matter of convenience in thoso cases where a Deputy Trustee is to have 'sole control.

Drawing Wills. . The report states that the instructions issued by the office for the .preparation of wills appear, to be defective. They givo no hint on the important question of the guardianship of children and 110 advice as to the incidence of death duties. Other defects are noted, and it is' suggested that if the preparation of wills by the oflico staff is to be continued it should bo confined practically to thoso cases where a personal interview is had. These observations aro not applied to sinip(e wills, such'as where a man leaves everything to his wi{^. A Spirit of Hostility. The Commissioners state that it was demonstrated to them (and it was frankly acknowledged -by .the Public Trustee) that a spirit of hostility has sprung tip between the Public Trustee and the legal profession during tho past two or three years. This has arisen in many cases out of the zeal of the' Public Trustee and his agents to attract . business, without, perhaps, a realisation of the extent to which such zeal might bring about a reaction. "It is for the Public Trustee," the report continues, "now that his attention has been called to the causes of the hostilo feeling referred to, to determine, with a duo 1-egard to the interests of tho otface, upon the best' method of arriving at a better understanding." It is recommended that a general rcistcr should b$ kept for the board of all unrealised properties which aro in the market or tho time for realising which has, according to the terras of the trust, arrived, and that this register should be specially, reviewed by the board at quarterly periods. It is also recommended that complaints should bo registered and como under the notice of tho board, so that that body might seo from time to time whether and how they havo been dealt .with or disposed of.

Improper Advertising. "Charges have been made under this head," states the report. "Some of tho forms are misleading, 6uch as: 'Capital and interest guaranteed by tho State'.' This is only correct with qualifications. Thero is no such guarantee unless the money is in the Common Fufad. There is no guarantee of an estate before it is realised. . That, the advertisement 'may ; mislead is evidenced by the terms of ono of the complaints brought before us, in which it was suggested that the State guarantee applied in a.caso of failure to collect certain arrears of rent." It is'recommended that all .who are taken on the staff should sign a declaration of secrecy,, and that, to place all on the same footing, existing members of the staff should sign a- similar declaration; also that all agents should do so. Remedy for Grievances. It is recommen<ic-u that a' solicitor or accountant duly authorised should be permitted to examine the file relating to an estate.. That any beneficiary aggrieved by any act or omission or decision of the Public Trustoo should bo entitled to apply to a Judge of the Supreme Court, and the Judge should be empowered to make such ordet as ho thinks fit. That final accounts rendered to beneficiaries should show tho death duty valuation of the assets so that a comparison of the results may be readily made. That there shouldbe an annual conference at Wellington of district managers. A Policy Laid Down. "It should be the policy of the Department," tho - Commissioners state in the latter part of their report, "not to arouso antagonism by overt acts of irritation and aggression, but to cultivate tho best relations with all sections of the public, and thereby enlarge its scope and usefulness in an amicable and legitimate manner. This becomes all the more a matter of necessity in the case of a great and beneficent concern avowedly not out for profit, but for the protection, of parties committed to its care by those who have confided in its integrity and stability. ■ "We cannot, therefore, too strongly condemn what has been clearly manifested in the courso of our investigations—a tendency to unduly, force tho growthi of business. i "A Dopartment such as this will bo more wisely lahd safely administered by avoiding stimulating processes and leaving, it to a discriminating public to appreciate naturally and gradually its worth and utility." Tho Commissioners rccord their thanks to tho members of tho staff and to others who have given evidence; also to their secretary, Mr. Gore, and his assistants for tho material help they have rendered. Legal Bureau. In a "rider" attached to tho report Mr. Macintosh says: "As the lay member of. tho Commission-1 desiro to add as my personal expression of opinion, that tho attempt to set up a legal bureau—for so it may bo described—in such a Department as that of tho Public Trustee, to undertake out-door work, is a very quesand rash, experiment, and • involves serious responsibilities that it would be prudent to avoid. Tho diccretlon of the testators or bonoficiaries 9hould notbe interfered with as regards the disposition of their, legal business* and it would bo well to abstain from conspicuously presenting alluring conditions in tho direction of cheap low, synonymous, perhaps, with faulty lnw'. In my opinion tho public and the Department itself would bo better served from outsido as regards much of tho extraneous legal work now undertaken by practitioners comparatively inexperienced in outside or general business." STATEMENT BY THE HON A L HERDMAN. ' '-• i LEGISLATION PROMISED. Commenting unon the Commission'.; report: the Hon. A. L. Hju'dmnVMinUtar in charge of tho Public Trust Offlcs) said

that shortly a Hot' tho prwul, (lovrrniiicnl: tock ollico it was derided, in consequence of complaints imule both inside lhi« llo|iso and out of il, (o appoint » Commission to report upon tho working of llm I'uhlio Trust Ollico. Tho document now published is Iho result of llm mupblluh'ions of Mr. Alexander Macintosh. Hnporinlendent of Dakoty and Co., ],ld,, and Mr. J. 11. .limiting, KM!., «lm were unpointed by Iho (lovei'iimcnl. lo conduct tho inutiiry. Tho roporl is an able and e.vhaustivo ono. Jt is full of valilnltlo suggestions and consiliums an admirable guido for tho future winking of (lie instilution.

Jho recommendation for tho separation °f tlio Nalivo purl of Iho business from the ordinary business of (he institution, Iho suggestion regarding tho alleralion of the constitution of Iho board, Iho proposniw that provision should bo made for Iho up. point.menl: of advisory trustees, and Iho many other helpful recommendation 1 ) which iho Commissioner have made, will reteiva tho iinmedinlo oonsidornlimi of Cabinet. Tho questions vuised about Iho sufficiency of tho stall' anil tho adequacy of their pay had already been parlly considered and partly dealt with, before Iho Commissioners reported, and will bo attended to by tho ruhlio Service Commissioners whose business it now Is to ileal ,with suoh mailers.

I propose lo advise Cabinet to inlrodiiee legislation next session to givo effect lo suoh of the proposals of tho Commissioners us require such action.

: ' •..Number. Notlnorease - 1 ., . ' ofJfuw . i in total J:stutcs. Business. ?S06 ■ .136 • 330,510 W ' ' 119 351!,12!) fJJ8 -70 194,998 •{J(® ■ . 504-,507 ~'plO - 29 J 299,110 !"J1 - •••••••• 'HO 453,573 ■ mi 430 . 3(i2,458