I.—ll

2

MINUTES OP EVIDENCE.

Tuesday, 15th August, 1905. J. K. Warburton, Controller and Auditor-General, examined. (No. 1.) 1. Mr. W. Fraser. ,] Judging by the correspondence submitted to us which has passed between the Treasury and yourself, Mr. Warburton, I gather that the reason why you have declined to certify in this matter is because you contend that under the Act interest cannot be paid out of public revenues on these debentures after the maturing of the debt? —Yes; my objection is that interest on the amount of the debentures for a period after the date of their maturity cannot be paid as a charge to the Loan Act unless provided for by a security authorised by the Loan Act. 2. Cannot be paid by anybody?—A payment cannot be made under the Act of interest for a period after the maturity of the debentures as interest authorised by the Loan Act. 3. Do I understand that it cannot be paid at all? Could it not be paid out of " Unauthorised " ?—lt might be paid out of "Unauthorised," but the objection taken by the Audit Office is to the payment as a charge to the Loan Act of such interest as is not provided for by a security issued for the money under the Loan Act. 4. But it could be paid out of " Unauthorised "1 Do you hold that?—l think it could. 5. What do you suggest—that the Loan Act should be altered so as to make provision for the payment of interest upon debentures until tEey are paid? Do you suggest that?—l think that the amount of a debenture should, if the loan is to be continued, be continued by the issue of a new security under the Loan Act from the date of the maturity of the old security. Then interest would be payable on the new security. The objection of the Audit Office is that there is no security under which interest is payable as a charge to the Loan Act, for a period after the date of the maturity, as in this case. 6. Might that not prove inconvenient in some cases? For instance, suppose that a debenture matured, as I believe in this case it did, on a Saturday, it is only a matter of a few days' interest that is in question, is it not?— Yes. 7. You would not suggest the issuing of a fresh debenture for a few days? If provision were made in the Loan Act that, if through any unforeseen cause a debenture was not redeemed or paid off on maturity, interest should continue to be paid upon it until it was paid ofi, would that meet your difficulty?—l think that would meet the difficulty; but that would require consideration, I presume. I think'that would meet the difficulty. 8. I want you to understand why I asked you whether the money could be* paid at all. It is because running through this correspondence there is the assumption that it could not be paid— that the public credit might be affected. Could that be so?— The Loan Act is an Act for raising moneys on certain securities, but there was no security bearing or providing for the payment of interest from the date of the maturity of the debentures, and the objection of the Audit Office was that the interest in such a case was charged to the Loan Act instead of to some other fund. 9. As, for instance " Unauthorised " ?—As, for instance, "Unauthorised." 10. Mr. J. Allen.] When did the debentures become due? Do you know?—l do not know, unless I have stated it in this paper. 11. You cannot tell us, I suppose, when the money was lodged with the Treasury to pay with? —The Treasury have a general imprest. 12. In his letter on page 2, No. 5, the Solicitor-General says, "I understand from the Treasury that in the present case the debentures were lodged with it a day or two prior to maturity (lst April) "1 —Yes, lst April. 13. Well, then, I presume that the debentures were lodged with the Treasury some time before the Ist April?—l am not sure. I had all the information, hut I really cannot recollect now. 14. It is quite clear that this money could have been paid out of " Unauthorised," is it not?— I am not prepared to raise any objection to that. I think it could have been paid out of " Unauthorised." 15. So that there would be no fear of any default on the part of the colony, would there?— Not if the interest were duly paid out of"" Unauthorised." 16. In answer to Mr. Fraser, you said that an amendment of the Act which would allow pay ment to be made under the Act itself, even after the debenture became due, would remove the difficulty, but that it was a mater for consideration. Supposing that a general principle were put into any Act that the interest on a debenture might be paid after the due date of the debenture, without any limitation, would it not be possible then for a debenture to go on for year after year and interest to be paid indefinitely?— Yes, within the limit of any period provided by the Loan Act. 17. I am assuming that there is no limit. That was the question put to you?—lt might go on indefinitely if provision were made in the authorising Act for paying interest for any period after the date of maturity at the same rate that the debenture carried, or at any rate. 18. If that principle were put into an Act there would be no object in putting in any limitation of time for a debenture, would there?— These are abstract questions that require to be studied, but that appears to be so. 19. That was the consideration you were referring to?— Yes. I find I have it noted here with regard to the payment of £1 7s. 4d., the amount in question, "Charge to Act. Approved by Treasury for payment, on the 12th April " : and the money was paid on the 16th April. 20. When did the debenture become due?—On the Ist April. 21. Eon. Sir 1. G. Ward.] After the Governor's Warrant was issued?— No. It was not after the Governor's Warrant was issued that this money was paid by the Treasury.