I.—7b

17

Treasury having the use of £180,000, which they would have had the use of under the old system ? Yes. 206. And to that extent the new system is against the Treasury, by decreasing the amount available under the old system ?—Yes. 207. Is it not a fact that the whole of this transaction is shown in the Financial Statement?— Yes, the contemplated issue of £145,400 debentures is shown. 208. Will you turn to the table and show where it is ?—There it is, on page 23 of the Financial Statement. 209. Hon. Sir B. Stout.] There are no details there?—No; they are never shown there.

Tuesday, 29th October, 1895. Mr. J. B. Heywood further examined. 210. Hon. Mr. Ward.} With reference to the dissent of the Assistant Controller and Auditor to the Treasury issuing debentures against the accretions of sinking funds belonging to the Government Loans to Local Bodies Act: did the Assistant Controller and Auditor, after the matter had been settled, point out to the Treasury that they had not included in the computation certain accretions of sinking funds ? —Yes, he did point out that on our sending up the computation. He pointed out that we were entitled to a sum of some £17,300 odd in excess of the amount we had put in the computation statement. 211. Hon. Sir B. Stout.] Against these particular loans? —Against the accretions under the Government Loans to Local Bodies Act, so that we were able to raise the amount from the sum of £67,000 odd to the sum of £85,200. 212. Hon. Mr. Ward.] Whatever difference of opinion there may have been between the Assistant Controller and the Controller and Auditor-General upon the propriety or otherwise of issuing debentures against the sinking funds as a matter of procedure, the Assistant Controller and Auditor called attention to an omission, and suggested, practically, an increase of the amount to be included in the computation ?—Yes, he stated that we had not put down the full amount of the accretions that we were entitled to draw against. 213. Would the fact of the Assistant Controller and Auditor having so suggested, in connection with this operation, go to show that he did not hold any strong opinions, at any rate, as to the legal propriety of giving effect to the operation ?—lt seemed to me to show this: that having accepted the opinion of the Controller and Auditor-General on the subject, fortified by the opinion of the Law Officers, he held that we were entitled to the whole of the accretions up to the 31st of March last, together with the accretions of the current year, and he pointed out that we had omitted the accretions of one of the previous years in the computation submitted. 214. Sir Robert Stout asked you whether you considered that the provisions of the Consolidated Stock Act enabled the Treasury to raise debentures in respect of the sinking fund accretions of previous years belonging to the Local Bodies Loan Act, and you said it did. Sir Robert Stout then pointed out that section 5 of the Consolidated Stock Act referred only to the accretions of the year, and could not be held to authorise accretions of previous years. You pointed out the proviso as to adjustment of any error made in a previous computation ; but you went on to say that you did not feel yourself competent to argue with him on points of law Hon. Sir B. Stout: He also added that the Law Officers' opinion had not been asked on this point. 215. Hon. Mr. Ward : I want to ask you, as Secretary to the Treasury and, in that capacity, the officer to whom I go for information and advice, If you had formed a clear opinion as to the propriety of including the accretions of previous years in this year's computation ?—Yes ; I had of course formed a very clear opinion on the position; and, as you ask me, I shall be glad to express my opinion to the Committee. This operation stands in a very different position to any previous operation. The provisions of " The Consolidated Stock Act, 1891," brings "The Government Loans to Local Bodies Act, 1886," under the provisions of the Consolidated Stock Act of 1884; and, that being the case, when it was determined to issue debentures against the accretions of the sinking funds of the Government Loans to Local Bodies Acts, 1886 and 1892, the Treasury of course considered that they had omitted to issue debentures during the previous years when they were authorised by law to do so ; and, having determined to issue debentures during this year, it was considered that the accretions of sinking fund up to date were brought within the provisions of section 5 of " The Consolidated Stock Act, 1884." In other words, it was determined that the Treasury had omitted to do what they were entitled to do by law during previous years, and therefore, under the authority of the Act as to the adjustment of any error committed during previous years, they were entitled to draw against the accretions for these years. Ido not know whether I have put the position as plainly as I might to the Committee, but I add that the present operation stands in a different position to that of previous operations. Sir Robert Stout asked me whether the accretions of previous years had been drawn against on any former occasion, and I replied, No, so far as I was aware. Of course they were not; because when the Act of 1884 came into force it only referred to sinking funds of loans expressed in the schedule of the Act. But, as I say, the Consolidated Stock Act of 1891 brought the Government Loans to Local Bodies Act under the operation of the Consolidated Stock Act of 1884, and, as the Treasury did not issue debentures until this year, it seemed to me very clear indeed that we were entitled to bring in anything we had omitted to bring in since the passing of the Act which enabled the Treasury to perform such operation. 216. Then, I understand that, in your independent judgment, the operation was a proper one ? —Clearly so. 217. Was there any pressure of any kind exercised by the Acting Colonial Treasurer to bring this about ? —Not the least. 218. Nor by myself previously ?—No ; you were away from the colony. 3—l. 7b."