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84

[P. S. WALDIE.

Percy Sawtell Waldie, Inspecting Officer, Public Works Department, examined. (No. 13.) Witness: I have been asked to give evidence with reference to a statement put in by Messrs. McLean and Sons relative to the Otira contract. I have prepared a report, Mr. Chairman, which, with permission, I will read : I have the honour to report that I have examined statement of accounts submitted by Messrs. McLean and Sons (Limited) as to the 30th June last with the books of the company, and confirm the correctness of the figures given, except as regards the item " Sundry creditors," in which a sum of £11 16s. 7d. owing by the company could not be located from the books. The working-expenses for years shown in profit and loss statement submitted by the company are confirmed by audited statements of profit and loss, except as regards the year 1909. In the statement submitted the working-expenses to September, 1909, are shown as £41,267 os. 9d.; value of work done on contract, £31,420. The estimated Profit and Loss Account for the year shows £38,767 os. 9d. and £28,920 respectively. The sum of £2,500 provided for in the contract in connection with huts for workmen explains the difference between the actual and estimated charges, the Plant Account having been credited with the sum transferred to the working-expenses. It is not claimed that the statement submitted by Messrs. McLean discloses the actual position of the company on the 30th June last, but the book balances at about that date. Thus the item " Interest due, £1,152 2s. 3d.," is the interest accrued to the Government as on the 30th September last, when the annual balance took place; the interest due in that connection on the 30th June last amounted to £1,990. Particulars of items comprising " Plant and materials " and " Working-expenses " to the end of June last are attached. Most of the items do not call for any particular comment, as a perusal of the list will disclose; but there are some items of expenditure to which attention is directed. Included in the particulars of workingexpenses to the 30th June last are the following, viz. : Interest, £1,863 3s. 4d. (paid to bank, &c, £711 Is. Id., and accrued to the 30th September last against advances by Government, £1,152 2s. 3d.); directors' fees, £300; auditors' fees, company's license fees, other expenses incidental to private individuals in business; also household expenses. The cost of management has been at a high rate throughout, and bears a greater proportion to the work executed than would be the case if carried out by the Government. The amount expended on salaries, engineering expenses. and wages of foremen to the 30th June, 1912, was £26,796 13s. Bd., including £3,297 charged to plant, &c. The percentage of cost of supervision charged to working-expenses to the total expenditure in that connection amounts to 11 per cent. Particulars of expenditure attached. Salaries now paid are as follows, namely: Two managers (at £1,500 per annum), £3,000; one engineer, £600; one accountant, £350; one electrical engineer, £300; one assistant engineer (£4 per week), £208; three timekeepers and storekeepers (£3 10s. per week), £546; one tunnel foreman (£5 per week), £260; three tunnel foremen (£4 10s. per week), £702; one outside foreman (£4 per week), £208; one foreman carpenter (£4 10s. per week), £234; two housekeepers (at £1 ss. and 155.), £104 : present annual rate of expenditure on supervision only, £6,512. A careful examination of details of working-expenses shows that the Plant Account is not unfairly debited with the cost of renewals and repairs : such expenses are properly charged against working-expenses. The cost of re-erecting buildings destroyed by fire is included in the working-expenses. No buildings are insured at present, but the premium payable to insure all the buildings would have probably equalled the loss incurred since insurance policies were allowed to lapse. I express no opinion as to the necessity to insure or otherwise. I have pleasure in acknowledging the services rendered by the secretary to Messrs. McLean and Sons (Limited), Mr. J. Williams, who gave every assistance in connection with the examination. [Report, with statements attached, handed in.] The statements attached are simply confirmatory in detail of the main items which are covered by Messrs. McLeans' statement. With regard to taking the book balances, I may state that the company do not close their books at the 30th June—their annual balance is at the 30th September; and there is a slight difference between the expenditure on Capital Account and working-expenses, as shown in the balance-sheet; but if take the working-expenses and the plant and add the two the total expenditure balances with the books. The difference is a very slight one, and is accounted for by adjustments made during the year as against the capital outlay. 1. Hon. Mr. Fraser.~\ Have you considered at all what the actual position would be supposing the contract were terminated and the work taken over by the Government? What would be the loss to Messrs. McLean? Let me ask you certain questions. The cost of the work has been—how much? —The actual cost of the work to the firm up to the end of June is £213,362 17s. 9d. 2. The value —100 per cent.—of the work as per contract i5?—£206,896. That is the full value of the work under the contract. 3. The difference in the cost of the work, then, is £6,466 17s. 9d.? —Yes, subject to various recoveries amounting to £1,772 ss. sd. 4. Leaving a balance 0f?—£4,694 12s. 4d. 5. But the Government have only paid 90 per cent, of the value of the work? —Yes. 6. Messrs. McLean leave 10 per cent., which the Government retain in the form of work completed ?—Yes. 7. That is £20,689, is it not?—No, £24,802. The retention was £20,689 to the end of June, and an amount was then available for payment of £4,113 for work done during June. 8. Then there is a deposit of £5,000 in the hands of the Government, is there not?— Yes, a cash deposit. 9. What does the total of all that come 12s. 4d., £24,802, and £5 000?—£34 496 12s. 4d. 10. That, then, would represent, assuming that nothing were paid to Messrs. McLean for the 10-per-cent. value of work which the Government retains, and that the Government retained