TIMBER ROYALTIES

Hokitika Guardian, 11 October 1928, Page 3

TIMBER ROYALTIES

' THE LOCAL BODY QUOTA. The Westland County Council has for years been assailing the Government in respect to timber royalties alleged to be short-paid in terms of the strict interpretation of the law. The Government in the past has recognised the claim to some extent, and on three occasions from 1914 to 1922, made refunds amounting to over £2,400. The local body, however, has not been satisfied that it has received all that is legally and equitably due, and there has been a renewal of the claim (for consideration from time to time. At beginning of the year during the sessional interval, the matter was . taken up again, and there has been further correspondence.

There follows‘the latest letters on the subject. The first is a lengthy explanatory letter from Hon. 0. Hawken, Commissioner of State Forests, to Mr Seddon, M.P., who has kindly acted in the matter, and made representations on behalf of the Westland County Council: —

TIMBER REVENUE. q Dear Sir, —Further to my letter of 23rd March last, and the reply from the Chairman of the Westland County Council, enclosed with yours of the 27th April, it is regretted that I have only recently had an opportunity of going into the matter in detail. The review by the Chairman of the Westland County Council of the legislation affecting the allocation oi tim ber royalties has been read with interest, and it would appear that his request is briefly that the question be referred to a Judge of the Supreme Court for an independent investigation and final settlement of the County’s claim.

1 cannot, however, concur in this contention as I am of the opinion that no legal question is involved. ' The position with regard to the law governing the allocation and payment of “Fifths” and “Halves” is, and always has been, perfectly clear, and it is considered that complaints in the past have arisen from a misunderstanding of the position. This question has, however, been thoroughly investigated on several previous occasions and the matter was finally settled by a compromise in 1922, when a payment of £2404 13 4d was made to the Westland County Council in full settlement of its claims. ,

In reviewing the legislation affectin the allocation of timber royalties greater emphasis should, I consider, be given to the historical aspects bearing upon the allocation of royalties’ and tlie proclamation of State Forests namely, that the power to proclaim Crown Lands as State Forests is not a new departure, bbt was authorised as far back as the New Zealand State Forests Act of 1885, under which Ad (and also the State Forest Act, HOextensive • reservations were made, which with increased appreciation of efficient forest management would have continued to be made.

Furthermore, under the Hax and Royalties. Act, 3.905, it was not contemplated that any portion of the money accruing from the disposal of timber in State Forests should be paid to local bodies. - Whilst it is admit,ted that the rerea' of Section .148 of the Mining Act; 1908. did-deprive the .Council of certain portions of the. revenue received from Midland Railway Mining Reserves, I think you will agree that this loss was more than compensated by Section 17 of the Finance Act, 1924, whereby local bodies became entitled to ,one-fiifth of the net proceeds of all sales of indigenous tunbor from Crown Lands and State Forests —revenue which they did

nob formerly receive. nom tlie attached schedule of royalties paid to the County it will he seen that, the County is receiving large sums .from timber sales, and a comparison of figures supplied by the State 1 orest Service and those by the County Clerk reveals a considerable difference for the year 1927. From the schedule you will note that the “Fifths” agree with those shown upon the County schedules, but that “Halves” are stated as £l6l IBs 3d in excess of that shown by the County Clerk, “Royalties Goldfields Revenue which is paid by the State Forests Service through the Treasury under the Forests Amendment Act, 1926, is shown in tlie schedule as £3107 12s Bd, whereas the County Clerk’s schedule apportions £1513 12s 10d only as having been received from the Jroasuiy.

From the enclosed schedule you will observe that timber royalty revenue paid to the County have increased in 1926 and 1927 by approximately £IBOO You will also note Ifrom these figures that there lias not been a drop in the revenue, but as anticipated the legislation lias bad a beneficial effect upon

the total sum accruing to the County from timber royalties. Moreover, the beneficial effect of the Forests Amendmment Act, 1926, upon timber revenues, does not appear to have been fully appreciated. It will not, I think, he disputed that this legislation prevented millers from hereafter acquiring huge speculative reserves of timber as was possible under the Warden’s administration for upwards of 42 years at practically r nominal royalty, and from conducting milling operations practically without competent supervision or any assurance that full revenues were accruingto the local bodies interested.

The small percentage of revenue from “ Wardens ” areas now going to the State Forests Account is merely a very inadequate insurance against loss of revenue which could not otherwise be safeguarded. There is, it is agreed, nothing to hide in this matter, and moreover, if js contended that 'the rights ; of flulocal bodies concerned have been legal ly and equitably conserved. The Accounts of the State Forest Service, as you are aware, are subject to an annual audit by which the County is as sured that the provisions of the Act affecting the allocation of timber royalties are carried out in terms of tin relevant legislation. Furthermore, Section 28 of the Fin ance Act (No. 2) 1927, authorised the County Council to make in each financial year a levy not exceeding one id per 100 ft board measure converted that year, thus the Council if it thinks fit has available additional resources by which its timber revenues may be augmented.

With the completion of the Midland Railway and consequent marketing facilities, there is no question that' these timber revenues have more than compensated for the loss of other classes of goldfields .revenue. On the other hand the conditions which justi fied the original endowments have altered. Broadly speaking the figures in the enclosed ■ schedule indicate that the Westland County revenue from timber is actually increasing. It has increased in an exceptional manner since the passing of the Forests Amendment Act, 1926, and it would appear thefor the year 1927-28 the revenues received from timber closely approximate the amount , received for. 1926, thus maintaining fair average annual revenue.

As the time is rapidly approaching when the West Coast territories will constitute one of the few remaining national store-houses of the indigenous timber, the County will long continue to receive substantial revenue without having to render the same full service as do’ Counties whose revenue is derived from agricultural products, the marketing of which is dependent upon efficient roading systems. From the aspect of rating costs also, the collection of this revenue is extremely economical to the Count .es affected, being practically equivalent t) a cash grant, and is paid without restriction as to its application.

On full review of the question, theiefore, I feel that it is not possible t • grant further privileges to the West land County. The following letter is feom tlm Westland County Council to the Commissioner of State Forests, Wellington, from the County Chairman: — TIMBEIi REVENUES.

Dear Sir, —I have the honour to acknowledge receipt of a copy of a Jottci addressed to T. Jfl. Y. Sedclon, Lsq. M.P., dated the 6th inst,, written " reply to my.previous memorandum of 27th April last, and for which 1 der you the thanks of the Westlair County Council.

Referring to the 6th and ,/th pain graphs of my memorandum I would respectfully point out that you have no! replied to my request in the oonelud ng portion of my memorandum of the 2/th April last for a statement of the timber sold from State Forests and Provisional State Forests in Westland during the period from the passing of “ The Forests’ Act, 1921-22 ” to the 31st March, 1924. It is claimed on behalf of the Westland County Council that Section 2 of “The Timber-and Flax Royalties Act, 1905 ” and Section 31.9 of “ The band Act, 1908,” did contemplate the payment of halves to the local bodies entitled in-respect of sales off timber in bulk. This legislation was enacted to enable local bodies in mining districts with a comparatively low rate producing capacity to repair and maintain roads over which there was a heavy and continuous traffic due to the operations of sawmillers. If tinlegislation referred to did not contemplate such payment, why was Section 17 (1) of “Tie Finance Act, 1924.’ enacted? This issue was referred to on page 6 of the Timber Royalties Commission of 1924, but was evaded bv Commissioner Strauehon as being a matter of law.”

On behalf of the County this question was seriously raised at the lu-a-ing, and as Commissioner Strauehon Celt himself incapable of deciding the point, surely it is obvious that the Council is entitled to have the mattedetermined by some competent tribunal . that is assuming the Government honestly believes it lias a good legal defence entitling it to resist my Council’s claim.

Tn paragraph 8 of your memorandum you refer to the large sum payable to the County in respect to halves from timber sales, but no reference is made to the sums which the County should have received prior to the amending legislation of 1924. The increase in the royalties derived bv the County from 1920 to 1928 does not affect the matter at issue. Such increase is merely an indication of the gradual expansion of the timber industry and the consequent additional bur-

clen thrown on the County by way of maintenance and upkeep cf roads. After a careful review of the whole position the County still considers that it is entitled to not less than two-fifths of the royalties from new timber cutting rights granted by the State Forest Service since the 31st March 1924 instead of one-fifth as provided by Section 17 (2) of “The Finance Act, 1924 ” and with respect to new timber cutting rights granted on Midland Railway Mining Reserves the royalty payable to the local body should continue to be twice the royalty paid in respect of licenses over other areas. That is to say, that ilf the County is granted two-filths of the royalties as suggested above in respect of new timber cutting rights granted by the State Forest Service since the 31st March, 1924, it should receive four-fifths of such royalties in the case of timber cutting l ights on the Midland Railway Mining Reserves.

Jn conclusion, the Council is still ot opinion that it has not received its failproportions of the revenues in respect of royalties, rents, fees, etc., that it should have received since 1900'under the legislation as it existed at the time, and that the only proper course is, as already suggested, to appoint a Supreme Court Judge with competent jurisdiction to make a thorough investigation into the whole position " ith authority to call for documents, production of all titles, books, recoids etc., summons witnesses, and call evidence available.

The Council would he willing to abide by the Judge’s decision or recommendation, this being the only means of deciding upon the Council’s legal and equitable claims in respect of, what the Council contends is its long oveidue rights and claims for these outstanding sums. With reference to the comparison of figures supplied by the State Forest Service and those by the County Clerk, and the considerable difference for the year 1927, I am not satisfied that the statement of the State Forest Service is accurate and bearing in mind that an officer of the State Forest was present at the interview in Hokitika, on xyii.ch occasion the County Clerk s figures were not challenged, V have ieqnested Mr Evans (County Clerk) to check both statements, and I. now append here to his observations thereon. The following memo for the County Chairman is from the Clerk of the Westland County Council. With reference to the letter dated September 6th. 1928 from the Commissioner of State Forests to T. E. Y. Seddon Esq M.P., and in particular in regard to the summary of tun bei rovalties. mentioned as due to the Westland County, I. have checked fee summary with the amounts actually received with the following results

The amount actually received is not clearly ascertainable, as in the s-m----marv received “miscellaneous is .se. down to cover both royalties and general. The aggregate of the “ miscellaneous ” is £728 11s 3d. Payment. The total received as royalties for this period appears to be actually op y £2040 18s 6d, a shortage of £1066 1. - 2d. .

SUMMARY OF SHORT PAYMENTS

£1,520 5 4 The foregoing discrepancies are so material that there appears to be mqrC occasion til.in ever for a close examination of the payments, and facilities should be given to check the total through the books of the local office 1 commend this suggestion to the con sideration of yourself and Council.

The County Clerk’s suggestion was adopted and it was decided further to draw the attention of the Hon. Minister to the effect that in April lust £934 7s 3d was received for March goldfields revenue, a monthly payment which exceeded considerably any other payment. Also to state that the Coin, cil feels that the items making up the aggregate sum should be given with more particularity, i.e., the total timber in respect to which royalty is calculated, tlie area from which timbci is taken, and the names ,c,if individual millers from whom obtained.

1C .w CT 3 1924. PAYMENTS UNDER FINANCE ACT, bC Q — t • Date. Payment. Received. Short paid. '£ s. d. £ s. d. £ s. d. £ s. d. 1924-25 ... *60 8 8 430 8 8 1925-26 ... 907 S 4 716 13 7 ISO 14 9 1926-27 ... 674 9 0 C3 ; 4 8 38 4 4 ft M 05.^3 O.P 1927-28 ... 593 10 2 593 10 2 *-» Amount short received £226 19 1 cc 2 O •

PAYMENTS FROM L. and S. DEPARTME NT. Date. Payment. Received. Short paid. Over paid. £ s. d. £ s. d. £ s. d. £ s. d. 1920-21 ... 1955 4 9 1740 10 8 214 14 1 1921-22 ... 2495 15 7 2300 9 6 195 4 1 1922-23 ... 1548 7 1 1893 14 9 345 7 8 1923-24 ... 1896 5 0 1896 1 4 0 3 8 1924-25 ... 3094 2 9 3094 3 1 0 0 4 1925-26 ... 1673 18 9 1673 18 8 1926-27 ... 294? -11 8 2919 11 8 1927-28 485 9 5 303 11 2 161 18 3 £572 0 1 £345 8 0 Less overpaid 345 S 0 £226 12 1

Payments under Finance £ s. d. Act, 1924 ... Forest Amendment Act, 226 19 1 1926 Payments from L. nad S. 1,066 14 2 Departments 226 12 1