1.-liA.

.1. W. POYNTON.j

35

46. Having regard to the question put, does that opinion say Yes, it was illegal?— The question is wrong, I might say. It says, " Loans have been granted at 3J per cent. : to borrow now costs 3| per cent." Our arrangement with the Post Office was that we were to get all loans at 3Jj per cent, and not 3| per cent. The statement in the question is not correct. The opinion states, " These contracts fix the rate of interest at which these loans or instalments are to be granted, and it may happen that the rate so fixed is less than the rate at which the money is subsequently raised by the Government to meet these loans." That is a supposititious case. " I am of opinion that this practice is illegal and should be discontinued." 47. What practice?— Fixing the rate of interest. 48. Do you notice that the question is not replied to? All the Solicitor-General deals with there is as to the power to make regulations fixing the rate of interest that will fluctuate according to the rate payable by the Government. Having regard to the. question put as to committing the country to future expenditure, does the Solicitor-General say it is illegal? —He says it is illegal. 49. Only as regards the rate of interest? —Yes, on the assumption that we commit the country to loans that we cannot get at the same rate of interest. 50. You have been making these agreements under the regulations? —Yes. 51. Were those regulations referred to in the Solicitor-General's opinion placed before the Solicitor-General to be perused before they were made? —The Crown Law Office issued the regulations under the Act. 52. And now the Solicitor-General says that those regulations which the Crown Law Office issued, and led the public to believe were correct, are illegal?— They seem to doubt that they are within the power of the Act. The opinion states, " The regulations, however, will require redrafting to some extent." 53. Then we have this position : that the regulations which were issued by the Crown Law Office, of which Professor Salmond is the head, are now declared by the same gentleman to be illegal?— That is the effect of it. He says, " This, I think, is the only legislative alteration that would be needed to introduce this change of practice. The regulations, however, will require redrafting to some extent." His statement that the lending of money to be paid in future years is illegal is inconsistent with the regulations drafted by the Crown Law Office. They allow loans to extend over four years. 54. I am referring to the regulations mentioned by the Solicitor-General? —I think it is Regulation 15. 55. What does it say?—" No loan and no instalment of a loan shall be paid to a local authority at any date later than two years after the date of the application for the loan, except in special cases, where the period may be extended by the Board to four years, with the consent of the Minister." 56. I understand, Mr. Poynton, that your reason for writing that memo, to the Minister of Finance was because of certain statements made in the House, and also because of certain headlines such as appeared in the Dominion, and also comments conveying the opinion that there had been a record of squandering and political influence used? —Yes, it was rather a serious statement to make. 57. Did you read the Evening Post, dated 30th September, 1912, which says, " Grave charges against the Ward Government were made in the House of Representatives early on Saturday morning by the Prime Minister, the Minister of Finance (the Hon. James Allen), and Mr. J. B. Hine. The accusation was that the late Liberal Administration had used the State-guaranteed Advances Office last year scandalously in ' sweeting ' certain electorates, mainly boroughs. It was stated that urban areas had been unduly favoured with loans, to the disadvantage of people in rural districts, and altogether the Government, in the year of the election, had mismanaged the lending Department to the detriment of the country as a whole and to the sore embarrassment of the present Ministry " ?—Yes, I read that. 58. Now, regarding political influence : has the Board the power of making recommendations to the Minister in regard to advances? —Yes. 59. If a Minister was open to a charge of political influence, would it not mean, in your opinion, influencing the Board?— Yes. 60. And therefore a charge of political influence against a Minister would carry with it the stigma that the Board was open to influence at the instance of Ministers or politicians?— Yes. The Board has much more to do with the loans than the Minister. Ihe Minister only came in when everything was finished. If political influence had been used it must have been used on the Board. 61. Was there any need to discriminate between the loans applied for?— You mean, discriminate between the loan, or the body ? 62. By reason of any representation made to you by a Minister of the Crown or a member of Parliament? —No, no Minister or member has ever attempted to in any way influence me. 63. Was any undue preference given to any application from any district?— The area of a particular district, or who represented it, never entered into the consideration of the Board. 64. As a matter of fact, districts represented by members on both sides of the House received loans ? —Yes. 65. Was there any need to show undue preference with the moneys you had in hand? —No. 66. Then it follows, does it not, that the charge of political influence falls to the ground?— There has never been any political influence used at all. That is my statement. 67. At the time the Timaru loan was applied for, can you say what was the rate of interest prevailing in regard to loans outside the Government?— They couid not get it under 4 per cent, with the discount —I should say i\. That is apart from any sinking fund. 68. What would it be in the open market?— With costs and commission, it would be fully 4 per cent, or more for a local body.