B.—4a

1558. It is important to remember, however, that each roading project which is put in hand either by the Government or by the local authorities, or by both, must result in increased annual maintenance cost, and we have already shown that the receipts derived from motor and allied taxation fall far short of the amount required each year for maintenance and interest and repayment charges on loans raised by the State and by local authorities. VOTE-TELEGRAPH EXTENSION. 1559. The amount provided under this vote in 1931-32 was £250,000, and the annual expenditure for 1914-15 and the last three years has been as follows: — £ 1914-15.. .. .. .. •• 288,395 1928-29 .. .. .. .. •• 624,414 1929-30 .. .. .. •• •• 594,383 1930-31 .. .. .. •• •■ 419,756 1560. The total capital provided for telegraph extension, post-office buildings, &c., up to the 31st March, 1931, was £12,202,101, in addition to which the sum of £1,617,062 has been provided by the Post and Telegraph Department, making a total sum of £13,819,163 invested as follows : — £ Telegraphs and tolls .. . . .. ■ • • • 2,368,052 Telephone exchanges .. .. .. •• •• 8,311,966 Wireless .. .. .. •• •• ■■ 64,629 Buildings and sites .. .. ■■ 2,615,807 Plant, workshops, garages, furniture, &c. .. .. .. 458,709 £13,819,163 1561. The interest and amortization charges on the above capital liability amount to approximately £592,000 per annum, against which the sum of £504,000 was received during 1930-31 as interest on the capital liability of the Post and Telegraph Department. The Savings-bank profits are subject to the direction of the Minister of Finance, and some relief may be obtained for the Consolidated Fund in this respect. Owing to increased postal revenue and reductions in salaries the Consolidated Fund benefited to the extent of approximately £1,000,000 during 1931-32. 1562. As regards the provision of new capital for the extension of the telephone system, we believe that the time has arrived when any necessary extensions should be financed from our own resources or from the earnings of the Post and Telegraph Department. 1563. It will be noted that the largest item in the vote under discussion is the construction of telephone exchanges, and some at least of these projects are necessary on account of the present exchanges having outlived their usefulness or being too small to meet present-day requirements. It is evident that the total cost should not be charged against new loan-money, and this is a further reason why borrowing for extensions of the system should be discontinued as soon as possible. VOTE—LANDS IMPROVEMENT. 1564. The amount provided for this vote for 1931-32 was £100,000. The expenditure for 1914-15 and 1930-31 was as follows : — £ 1914-15 .. .. .. .. •• 13,810 1930-31 .. .. .. .. 70,534 1565. It may be stated that a comparison of the actual amount expended under the vote in 1914-15 and in 1930-31 is misleading, for the reason that various works which are now financed from the vote were in previous years financed from special accounts —e.g., Waihou and Ohinemuri Rivers Improvement. However, during recent years, the expenditure has been in the vicinity of between £70,000 and £80,000 and is substantially by way of grants to local bodies for drainage, access, river protection, &c., for which no financial return can ever be expected. Furthermore, the amounts provided from this vote are in addition to extensive grants from the Consolidated Fund for what may be termed national development, and are also in addition to substantial expenditure which has been incurred in respect of drainage and reclamation of land from the Hauraki Plains Settlement Account, Rangitaiki Land Drainage Account, and the Swamp Land Drainage Account, all of which are under the administration of the Department of Lands and Survey and are reviewed in connection with that Department. 1566. Expenditure by way of subsidies to Drainage Boards and other local authorities for drainage, river protection, water-supply, and other works should be provided from the Consolidated Fund, as non-productive expenditure of this nature is not a legitimate charge against loan-money. We accordingly recommend that the vote be transferred to the Consolidated Fund as soon as financial conditions will permit.

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