B.—No. 2a.

REPORT BY THE AUDITOR-GENERAL ON THE ACCOUNTS OF THE COLONIAL TREASURER FOR THE FINANCIAL YEAR 1868-69.

PEESENTED TO THE HOUSE OF REPRESENTATIVES UNDER THE 60th SECTION OF "THE PUBLIC REVENUES ACT, 1867." i WELLINGTON. 1870.

8.-fq.2*. '

Statement in explanation of the Sums Payable and Paid to the Pbovinces, on Account of the Consolidated Revenues, during the Financial Tears 1867-8 and 1868-9.— \JPage 87 of printed Accounts .] It will be found, on comparing the Statement of last year with that of the present year, that the transactions of the month of June, 18C8, have been omitted. The following complete Statement brings out the same result as that shown in the Treasury Statement, and shows an over-payment to the Provinces of £199 6s. sd. It has, nevertheless, been thought best to show the omitted revenues in an amended Statement, to guard against a doubt which might arise whether the Provinces had not been overpaid.

STATEMENT in Explanation of SUMS PAYABLE and PAID to the PROVINCES, on Account of CONSOLIDATED REVENUE, during the Years 1867-8 and 1868-9.

£ b. d. Paid to Provinces 413,147 18 11 Payable to Provinces for appropriation ... ... ... ... ... ... 412,948 12 6 Paid to Provinces in excess of the amount to which they were entitled ... £199 6 5 The Auditor supplies, in continuation of his Eeport on the Accounts for the Einancial Tear 1867-8, an Abstract of the Consolidated Eevenue Account, showing the sum of £11,168 19s. 3d. deducted from the Disbursements of the year 1868-9. This sum, together with £77,291 4s. lOd. deducted in tho Auditor's Abstract of the previous year, makes a sum of £88,460 4s. 1d.,, which had been improperly introduced in the Treasury Accounts for the year 1867-8, and thus clears up and completely adjusts the Accounts. The Auditor also furnishes a continuation of the Three Million Loan Account. It will be observed that the value of the Debentures in circulation on the 30th June, 1869, was £3,000,325, being £325 in excess of the sum authorized to be raised under the " Now Zealand Loan Act, 1863." This excess forms part of the Debentures issued under the authority of Debenture Act, 1864-5. A transfer of £20,000 to the Consolidated Eevenues should have been made from the " Consolidated Loan, 1867," Account, according to the terms of "The Appropriation Act, 1868," instead of from the Three Million Loan. Consolidated Eevenue Account, 1868-9. £ s. d. £ a. d. Cash in Public Account") on 30th June, f 46,979 15 11 Disbursements on General Services ... 1,065,554 16 6 Advances outstanding j 1868 { 83,619 18 4 Ditto on Provincial Services 356,120 8 4 £1,421,675 4 10 Receipts of Eevenue ... ... ... 1,030,775 13 4 Deduct Interest charged in Accounts of former years 11,168 19 3 Sinking Fund Release 9,991 6 2 £1,410,506 5 7 Transfers from Special Funds 139,474 0 7 Treasury Bills redeemed 150,000 0 O Overdraft 60,000 0 0 Treasury Bills 188,650 0 0 Balance on 30th June, 1869 1,015 11 3 £1,560,506 5 7 £1,560,506 5 7

AUDITOR'S REPORT ON THE ACCOUNT OF THE COLONIAL TREASURER EOR THE FINANCIAL YEAR 1868-9.

1. 2. 3. 4. Interest and Sinking Fund on portions of Loans chargeable to Provinces. 5. 6. Moiety of Transfers from other Funds to Payments on Account of Services Provincially charged. Payable to Provinces for Paid to Eeceipts. mate up Appropriation. Provinces. Expenditure. 'ear 1867-8, printed Account, p. 98. [onth of June, 1868, omitted. "ear 1868-9, printed Account, p. 87. £ s. d. 450,503 10 8 £ s. d. 1,874 12 7 £ s. d. 161,268 17 3 £ s. d. 47,553 14 4 £ s. d. 243,555 11 8 £ s. d. 260,683 12 5 39,022 17 5 21,907 4 3 5,586 5 8 11,529 7 6 452,920 19 5 14,283 11 8 182,560 2 4 126,780 15 5 157,863 13 4 152,464 6 6 942,447 7 6 16,158 4 3 365,736 3 10 179,920 15 5 412,948 12 6 413,147 18 11

E'.rV-Nbr2A.

Loan of Theee Millions. £ s. d. £ s . d. Balance, 30th June, 1868 200,049 8 9 Suppression of Rebellion 6,475 6 4 Introduction of Settlers, Surveys, &c. ... 7,944 1 7 Recoveries ... ... ... ... 1,618 6 6 Reinstatement of Taranaki ... ... 1,835 11 2 Transfer to Revenue, v. Appropriation Act, 1869, sec. 14 105,190 8 11 Transfer to Eevenue, v. Appropriation Act. 1868, sec. 5 20,000 0 0 Debentures in Circulation, £3,000,325. Debentures issued under " The Debenture Act, 1865," redeemed 48,207 15 H Balance, 30th June, 1869 12,014 11 _ £201,667 15 3 £201,667 15 3 The following Provincial Charges, made under the head of " Distillation Act, 1866," are objected to:— 1. " Eewards paid to Peter Pender and E. Pain, out of fine of £100 recovered in the Eesident Magistrate's Court, Christchurch, £66 13s. 4d.; charged against the Province of Canterbury." 2. " Eose, one-third of balance of £50 recovered, £14 18s. 3d." " The Distillation Act, 1866," section 20, provides that all fines, penalties, and forfeitures shall bo divided and applied in a certain manner, viz., that the expenses are first of all to be deducted from the amount recovered, and, after payment of the seizing officer and the informer, the balance is to be paid to the " Public Account." In the instances above referred to, the whole of the fines has been paid into the " Public Account." Taking the first case, there was paid to Eevenue £100, which sum has been divided thus:— General Government moiety, £50 ; Province of Canterbury moiety, £50; but against this receipt of £50 the Province has been debited with the reward of £66 13s. 4d., thus being deprived of the £50 revenue, and losing £16 13s. 4d. besides. Had the direction of the Act been followed, the accounts would stand thus: — £ s. d. Fine recovered ... ... ... ... ... ... 100 0 0 Less rewards ... ... ... ... ... ... 66 13 4 Balance to Public Account ... ... ... ... ... £33 6 8 Of which the General Government would get one moiety and the Province the other. As the accounts at present stand, the General Government gets £50 and he Province of Canterbury is mulct in the sum of £16 13s. 4d. It is unnecessary to continue the illustration with reference to the second item, the result being of a similar nature. It is submitted that an adjustment of the accounts should be made, so as to relieve the Provinces of these charges. The following payments are charged Provincially, under the head of " Customs Eegulations Act, 1858:"— Gounty of Westland: £ s. d. Voucher 1321—C. Limming, half of £24 recovered ... ... 12 0 0 Province of Auckland: £ s. d. Vouchers 6973-6979 —Sundry awards, about £100 recovered ... 72 10 0 Wilson, balance of reward of £30 ... ... 5 0 0 Touchers 9187-9 —Maoris'rewards ... ... ... ... 15 0 0 ';. Voucher 2217—Eose, half of seizure ... ... ... ... 416 4 Voucher 2218—11. McKellar ... ... ... £125 0 0 H. McKellar ... ... 23 15 0 (£47 10s. credited to Eevenue in this case.) ■ • 148 15 0 Touchers 2219, 4124, 4125—Aubrey and others ... ... ... 20 0 0 H. Aubrey, reward ... ... ... 50 0 0 (On account of seizure of " Eingdove," sold for £265.) ;:) .;■• . D. Lundon, half of seizure recovered ... 0 11 6 Total charge against Auckland ... ... ... £316 12 10 Province of Wellington : —Acheson and others, rewards in Jenkins' case £130 0 0 Province of Hawke's Bay .- —Tabuteau, &c, rewards and share of penalty recovered ... ... ... ... ... ... ..,: £25 0 0

4

REPORT BY THE AUDITOR-GENERAL ON THE

B.—No. 2a.

" The Customs Eegulation Act, 1858," section 185, provides that all payments up to £50 on account of rewards for convictions, and, when seizures are made, any sums up to the value of the goods seized, are to be made out of Customs Eevenue. The above payments should, it is considered, have been deducted from Customs Eevenues as a first charge, before determining the moiety of Consolidated Eevenues payable into the Provincial chest. The effect of the course followed by the Treasury is to throw the burden of these first charges entirely on the Provinces, instead of making them charges on the Customs Eevenues before distribution. With regard to the sum of £125 charged against the Province of Auckland on account of the schooner " Eingleader," there is a peculiar unfairness, as the vessel has apparently been taken possession of by the General Government, and no portion of her appraised value, so far as can be discovered, has been credited to the Province. The matter is submitted with a view to an equitable adjustment being made with the various Provinces interested. Refunds. During the year 1868-9 the sum of £3,099 Bs. 7d. in the aggregate has more or less unfairly been charged against the revenues of the Provinces. In illustration of this, take the following case : — A sum of £10 on account of Patent Pees was collected in the County of Westland, and the General Government received £5 and the County of Westland £5. Afterwards a return of the sum paid is authorized by the Government, and the County of Westland is charged £10, and thus not only loses the original moiety of the sum collected, but is made to pay £5 extra without receiving the slightest benefit. It is doubtful whether the General Government has the right to charge Provincial Eevenues in this direct way with refunds ; but there can be no doubt that it will be considered equitable that an adjustment should be made by which the Provinces shall be repaid, from General Eevenues, the sums with which they have improperly been debited. The Auditor reserves for consideration whether the proposed adjustment should not extend to the financial year 1867-8. Sinking Funds. "New Zealand Loan Act, 1856," £500,000—[Page 11 of printed Statement] :— The sum of £15,750 includes a double charge of £750 on B and E series of tho Half Million Loan for the half year ending 31st March, 1869. In the General Balance Sheet, p. 7, there stands to the credit of this loan the same balance as on the Ist July, 1868, namely, £101,281 Bs. Id., although the Treasury has charged the Consolidated Eevenues (in addition to the last sum) £15,750 as payments on account of Sinking Eund ; thus the balance to the credit of the Sinking Eund shows £15,750 less than the sum actually discharged out of the Consolidated Eevenues. The reason of this would appear to be that the Trustees of the Sinking Eund in London have furnished no accounts since Ist January, 1868. " New Zealand Loan Act, 1860," £150,000 :— No payment on account of the Sinking Eund of this Loan has been charged on the Consolidated Eevenues of the financial year 1868-9. Colonial Treasurer's Statement, at page 86 of printed Statement, showing the Loans on account of ivhich the Provinces have been charged Interest and Sinking Pund. The Auditor objects to this Statement in several particulars, and submits that it should be amended, and the accounts of the year readjusted. The Auditor furnishes a copy of the Treasurer's Statement, and places in opposite columns the results of his own investigation of the Public Accounts in this matter. In the opposed statements it has been necessary, in respect of the Province of Auckland, to exhibit the particulars of the previous year in addition to those of the financial year under consideration, as some of the transactions on the unconverted portions of the Loans for the two years cannot be well separated for the purpose of comparison. The Auditor finds that the following overcharges have to be adjusted:—Province of Auckland overcharged, £2,025 Is. 6d.; Province of Southland, overcharged, £161 lis. Id. The short-charges are as follows :—Taranaki, £437105.; Wellington, £221175. 3d.; Hawke's Bay, £1,050; Nelson, £1,243 2s. Id.; •Canterbury, £10,893 14s. 2d.; Otago, £6,148 16s. 3d. 2

5

ACCOUNTS OE THE COLONIAL TREASURER.

B.—No. 2a.

6

EEPORT BY THE AUDITOR-GENERAL ON THE

TREASURY STATEMENT. AUJJll -±_lX_j_1J_._ _L. Statement showing the "Principal" of Loans upon which Interest and S_____-G Fund has been recovered from Provisoes, for the Year 1868-69. Statement showing the " Principal " of Loans, and the amount of Interest and Sinking Fund thereon, to be recovered from Provinces in the Year 1868-69. Auckland. £ s. d. £ s. tl. Sums Recovered on account of the Financial Year 1867-68 ... ... 37,318 11 4 Do. do. 1868-69, viz. :— Loan, 1856, £90,000, at 6 per cent., for the Year 1868-69 5,400 0 0 Deduct Interest on £9,690 lis. 2d. ... ... ... 581 8 4 Auckland. £ s. d. £ s. d. ;Si(ro____coE-. __/_ forthetwoFinaneial Years 1867-68 and 1868-69: Loan Act, 1856, £90,000, at 6 per cent., for the Year 1867-68 5,400 0 0 Deduct Interest on £9,690 lis. 2d., for the Year 1867-68 ... 581 8 8 — ■ 4,818 11 4 4,818 11 8 Loan Act, 1856, £90,000, at 6 per cent., for the Year 1868-69 5,400 0 0 Deduct interest on £9,690 lis. 2d., for the Year 1868-09 ... 581 8 4 Consolidated Loan, £498,675, issued for conversion of Provincial Bonds, from 1st October, 1868, at 6 per cent. ... ... ... 22,410 7 6 Provincial Loan, unconverted ... ... .., ... ... 12,550 0 0 4,818 11 8 Consolidated Loan, £498,675 issued, 1st conversion, Interest and Sinking Fund, 15th April, 1868, to 15th January, 1869, at 6 percent. ... ... ... ... "... ... ... 22,410 7 0 Consolidated Loan, £502,762 issued, 1st and 3rd conversion, 15th January to 30th June, 1869, at 6 per cent. ... ... ... 14,0/5 19 4 Interest on Provincial Loan, unconverted, £500,000, 1st October, 1867, to 1st April, 1868, at 6 per cent. ... ... ... ... 15,000 0 0 Sinking Fund, do. do., 1st July, 1867, to 1st April, 1868, at 2 percent. ... ... ... ... ... ... ... 8,333 6 8 Interest on do., accrued before conversion, paid at the time of conversion ... ... ... ... ... ... ... 1,209 7 6 Do. do., from 1st April, 1868, to 1st October, on amount, £3,750, converted on the 15th January, 1869, 6 per cent. ... ... 112100 Sinking Fund on do., do. do., at 2 per cent. ... ... ... ... 37 10 0 Sinking Fund on do., on £457,500 first converted, 1st to 15th April, 1868, 2 per cent. ... ... ... ... ... 381 5 0 Interest and Sinking Fund on do., on £38,750, 1st April, 1868, to 30th June, 1869, 8 per cent. ... ... ... ... 3,875 0 0 £77,127 10 6 £75,102 9 0 Taranaki. £ s. tl. £ s. tl. Loan, 1856, portion of £581 8s. 4d. ... ... ... ... 5 9 11 Consolidated Loan, £25,000, issued in lieu of unissued Provincial Debentures, from 1st August, at 6 per cent. ... ... ... 1,375 0 0 Taranaki. £ s. d. £ s. d Loan, 1856, portion of £581 8s. 4d. ... ... ... 5 9 11 Consolidated Loan, £25,000, issued in lieu of Provincial Debentures, 15th April, 1868, to 30th June, 1869, at 6 per cent.... 1,812 10 0 £1,817 19 11 £1,380 9 11 Wellington. £ s. d. £ s. d. Loan, 1856, £27,000, at 6 per cent. ... ... ... 1.620 0 0 Add portion of £581 8s. 4d. ... ... ... ... 73 18 9 Wellington. £ s. d. £ s. d. Loan, 1856, £27,000, at 6 per cent. ... ... ... 1,020 0 0 Add portion of £581 8s. 4d. ... ... ... ... ■ 73 18 9 1,693 18 9 Consolidated Loan, £97,748, issued for conversion of Provincial Debentures, from 1st October, at 6 per cent. ... ... ... 4,398 12 9 1,693 18 9 Consolidated Loan, £97,748, issued 2nd conversion, 15th July, 1868, to 30th June, 1869, at 6 per cent. ... ... ... 5,620 10 0 £6,092 11 6 £7,314 8 9

B.—No. 2a.

7

ACCOUNTS OE THE COLONIAL TREASURER.

TREASURY STATEMENT— continued. AUDIT STATEMENT— continued. Statement showing Principal of Loans, &c. — continued. Statement showing Interest and Sinking Fund, &c. — continued. Hawke's Bay. £ s. d. £ s. d. Loan, 1856, £27,000, at 6 per cent. ... ... ... 1,620 0 0 Add portion of £581 8s. 4cl. ... ... ... ... 20 16 3 Hawke's Bay. £ s. d. Loan, 1856, £27,000, at 6 per cent. ' ... ... ... 1,620 0 O Add portion of £581 8s. 4d. ... ... ... ... 20 16 3 £ s. d. 1,640 16 3 1,640 16 3 Consolidated Loan, £60,C0O, issued in lieu of unissued Provincial Debentures, from l.t August, at 6 per cent. ... ... ... 3,300 0 0 Consolidated Loan, £60,000, issued in lieu of Provincial Debentures, 15th April, 1868, to 30th June, 1869, at 6 per cent. 4,350 0 0 £4,910 10 3 £5,990 16 3 Nelson. £ s. d. £ s. d. Loan, 1856, £45,000, at 6 per cent. ... ... ... 2,700 0 O Add portion of £581 8s. 4d. ... ... ... ... 73 5 0 Nelson. £ s. d. Loan, 1856, £45,000, at 6 per cent. ... ... ... 2,700 0 0 Add portion of £581 8s. 4d. ... ... ... ... 73 5 0 £ s. d. 2,773 5 0 2,773 5 0 Consolidated Loan, £15,647, issued for conversion of Provincial Debentures, from 1st October, at 6 per cent. ... ... ... 704 2 0 Provincial Loan unconverted, £1,000, from 1st January, at 10 per cent. ... ... ... ... ... ... ... 50 0 0 Consolidated Loan, £15,647, issued 2nd conversion, 15th July, 1868, to 30th June, 1869, at 6 per cent, Consolidated Loan, £14,448, issued to redeem £13,980 Provincial Debentures due, 15th April, 1868, to 30th June, 1869, at 6 per cent. Provincial Loan, unconverted, £1,000, at 8 per cent. Interest, and 2 per cent. Sinking Fund, 1st January to 30th June, 1869... 899 14 6 1,047 9 7 50 0 0 £3,527 7 0 £4,770 9 1 Marlborough. £ s . __[_ Loan, 1856, portion of £581 8s. 4d. ... ... ... ... 5 16 0 Marlborough. Loan, 1856, portion of £581 8s. 4d. £ s. d 5 16 0 Canterbury and Westland. £ s. d. £ s. d. Loan, 1856, £74,000, at 6 per cent. ... ... ... 4,440 0 O Add portion of £581 8s. 4d. ... ... ... ... 176 3 0 Canterbury and Westland. £ s. d. Loan, 1856, £74,000, at 6 per cent. ... ... ... 4,440 O 0 Add portion of £581 8s. _d. ... ... ... ... 176 3 0 £ s. d. 4,616 3 0 4,616 3 0 Consolidated Loan, £349,018, issued for conversion of Provincial Loans, 1st conversion, from 1st July to 30th September, at 6 percent.... ... ... ... ... ... ... 5,235 5 6 Consolidated Loan, £378,843 10s., issued for conversion of Provincial Loans, 1st and 2nd conversion, from 1st October, at 6 percent.... ... ... ... ... ... ... 17,047 19 0 Consolidated Loan, £47,524, issued for conversion of Provincial Debentures, 3rd conversion, from (no date stated) to end of June ... ... ... ... ... ... ... 195 0 11 Consolidated Loan, £349,018, issued 1st conversion, and £8,720 issued 2nd conversion, £357,738, 15th April, 1868, to 30th June, 1869, 6 per cent. Consolidated Loan, £21,105 10s., remainder of 2nd conversion, 15th July, 1868, to 30th June, 1869 ... Consolidated Loan, £47,524, issued 3rd conversion, 15th January, 1869, to 30th June, 1869, 6 per cent. ... Consolidated Loan, £266,600, issued iu lieu of Provincial Debentures, 15th April, 1868, to 30th June, 1869, 6 per cent. 25,936 0 1 1,213 11 3 1,300 18 3 19,328 10 0 £41,757 8 5 Deducted from the amount recovered in June ... ... ... 250 0 0 £41,507 8 5 Note. — By a clerical error in the copy of the Auditor-G-eneral's Report the following item was omitted :—" Provincial Loan unconverted —Interest on £266,600 from 1st August, 1868, to 30th Juno, 1869, £14,663." This sum being included, makes up the total of £41,507 8s. 5d. The Division between Canterbury and Westland will be made in a separate Account. £52,401 2 7

B.—No. 2a.

8

REPORT BY THE AUDITOR-GENERAL ON THE

TREASURY STATEMENT— continued. AUDIT STATEMENT— continued. Statement showing Principal of Loans, &c. — continued. Statement showing Interest and Sinking Fund, &o. — continued. Otago. £ s. d. Loan, 1856, £63,000, at 6 per cent, ... ... ... 3,780 0 0 Add portion of £581 8s. 4d. ... ... ... ... 200 5 5 £ s. d. Otago. £ s. d. Loan, 1856, £63,000, at 6 per cent. ... ... ... 3,780 0 0 Add portion of £581 8s. 4d. ... ... ... ... 200 5 5 £ s. a. 3,980 5 5 3,980 5 5 Consolidated Loan, £372,017, issued for conversion of Provincial Debentures, 1st conversion, 1st July to 30th June, at 6 per cent. Consolidated Loan, £31,535 15s., part of Debentures issued in 2nd conversion of Provincial Debentures, 1st October to 30th June, 6 per cent. Consolidated Loan, £25,918, new issue to provide for payment under the Surplus Revenue Adjustment Act, 1st August to June, 6 per cent. 22,321 0 3 1,419 2 2 1,425 9 10 Consolidated Loan, £372,017, issued 1st conversion, and £7,521, issued 2nd conversion, £379,538, 15th April, 1868, to 30th June, 1869, 6 per cent. Consolidated Loan, £27,622 10s., remainder of 2nd conversion, 15th July, 1868, to 30th Juno, 1869, 6 per cent. Consolidated Loan, £11,277 5s., issued 3rd conversion, 15th January, 1869, to 30th June, 1869, 6 per cent. Consolidated Loan, £26,200, new issue, to provide for payment under Surplus Revenue Adjustment Act, 15th April, 1868, to 30th June, 1869, 6 per cent. 27,516 10 1 1,588 5 11 310 2 6 1,899 10 0 £35,294 13 11 £29,145 17 8 Southland. £ s. d. Loan, 1856, £18,000, at 6 per cent, ... ... ... 1,080 0 0 Add portion of £581 8s. 4d. ... ... ... ... 25 14 4 £ s. d. Southland. £ s. d. Loan, 1856, £18,000, at 6 per cent. ... ... ... 1,080 0 0 Add portion of £581 8s. 4d. ... ... ... ... 25 14 4 £ s. d. 1,105 14 4 Consolidated Loan, £5,785 9s., new issue to provide for payment under the Surplus Revenue Adjustment Act, 1st August to 30th June, at 6 per cent. Consolidated Loan, £418,829 8s. 9d., issued to redeem Southland Certified Debt, and Interest thereon, also to provide Interest to the 31st December, 1868, as required by section 3, " Consolidated Loan Provincial Charges Act, 1868," 1st January to 30th June, 6 per eent. 1,105 14 4 318 2 6 12,564 18 9 Consolidated Loan: — All the Certificates granted by the Auditor-Oeneral, under the Southland Debt Acts, before the 30th June, 1869, and £ s. d. redeemed with Interest on or before that day, amounted to,.. 386,636 18 9 Sum to be paid under the Surplus Eevenue Adjustment Act... 5,611 17 9 Portion of expenses of raising Loan to be paid by the Province. (See printed Account, page 97) ... ... 1,814 7 0 £394,063 3 6 The Debentures issued at 97 per cent, to provide for the above £ s. d. sum were ... ... ... ... ... 406,250 14 0 Interest thereon, from 15th April to 31st December, 1868, at 6 per cent., was £17,265 13s., which, being capitalized as required by the Consolidated Loan Provincial Charges Act, absorbed the proceeds of Debentures at 97 per cent. ... 17,799 12 10 £13,988 15 7 New issue ... ... ... ... ... £424,050 6 10 Interest and Sinking Fund, from 1st January to 30th June, 1869, 6 per cent. 12,721 10 2 £13,827 4 9

ACCOUNTS OF THE COLONIAL TREASURER.

B.—No. 2a.

9

Trust Funds. The Hon. Mr. Fitzherbert invested on Trust Fund Account the sum of £80,035 10s. in New 5 per Cent. Bonds of the value of £81,900. But it happened that the Comptroller would not accept more than £50,000 of new Bonds, and it became necessary to dispose of the balance either for cash or conversion. As the whole £81,900 of new Bonds were obtained for £80,035 10s., the £50,000 of new Bonds taken up by the Comptroller represents £48,861 14s. in cash, and this sum only ought to have been taken out of Trust Fund moneys as being invested in New 5 per Cent. Bonds. It is found that the sum actually taken is £50,035 10s. It would thus appear that £1,173 16s. is due to the Trust Fund on this account. There is now standing at the credit of Suspense Account the sum of £1,305 10s. available for the purpose of making good the deficiency of the Trust Fund Account. This sum was carried to the credit of " Suspense " in June, 1869, and was apparently arrived at by the Treasury thus : — Amount realized on sale of Bonds not taken up by the Comp- £ s. d. troller ... ... ... ... ... ... 16,305 10 0 Balance of ditto taken at par ... ... ... ... 15,000 0 0 £31,305 10 0 Less credit to Trust Fund in the Colony ... ... ... 30,000 0 0 At" Suspense," pending adjustment ... ... ... £1,305 10 0 Eocommended, that out of this sum of £1,305 10s., the debt duo to the Trust Fund may be discharged. Consolidated Loan Account. The Treasury Statement of the operations under " The Consolidated Loan Act, 1867," pages 90 and 99, is, in some respects, complicated. For instance, on reference to page 90, there will be found, on the " Dr." side of the Account Current, under the heading " Amount raised for purposes specified in ' The Public Debts Act, 1867,' " the sum of £1,080,580. On the " Cr." side, at pages 91 and 93, this sum will be found broken up as follows: —New Zealand Government, £298,275 ; Taranaki, £24,250 ; Hawke's Bay, £58,200 ; Canterbury, £258,602 ; Otago, £25,414 ; Southland, £415,839. At page 97 these sums are again brought into a total sum of £1,080,580 on the " Cr." side of the Account, and deducted from the gross amount issued for redemption and conversion of Provincial Debentures. The gross sum is then transferred to the " Dr." side of the page, where it is added to the casual receipts belonging to the " Public Debt Account," and where it again disappears by subtracting it from the casual receipts to which it had just above been added, and now, apparently, it disappears altogether. Tho course adopted by the Treasury, of requiring the Provinces to refund the fractional parts of the Provincial Bonds, is unnecessary, and only tends to complicate the Public Accounts. What was required to be done in this matter was simply either to exchange the old Bonds for New 5 per Cents., or to pay them off in cash obtained from the sale of new Bonds. In no case would any charge, except for Interest and Sinking Fund, be brought either against the General Government or the Provinces by these operations, and the new Bonds represent the total Provincial Debentures, whether taken up by way of exchange or paid in cash. It will presently be seen that the omission of the fractional sums paid in cash docs not affect the Treasury balance. In order to avoid these intricacies of accounts the Auditor furnishes an Abstract of the Treasury Statement, in which the transactions on account of the Public Debts Act and of the Consolidated Loan are thrown into the same return, and the " cross " entries and the " fractional parts " omitted. The Treasury balance is not affected by these alterations. 3

B.—No. 2a.

ABSTRACT of CONSOLIDATED LOAN ACCOUNT, and of "The Public Debts Act, 1867," Account, up to the 30th June, 1869.

10

REPORT BY THE AUDITOR-GENERAL ON THE

New 5 per Cents, prepared for issue Advances in Year 1867-68, on account of " Public Debts Act, 1867 " Advances on £100,000 hypothecated New 5 per Cents. Sums recovered on account of Interest paid on Provincial Bonds, viz.: — £ s. d 4,191,000 0 0 190,000 0 0 80,000 0 0 New 5 per Cent. Bonds issued for Conversion of old Bonds, chargeable as follows :— £ s. d. GeneralGovernnient, on account of...£1,397,000 of old Bonds cancelled ... 1,525,937 0 0 General Government, „ ... 3,150 of Taranaki cancelled ... 3,354 15 0 Province of Otago, „ ... 383,400 Provincial Bonds cancelled ... 418,437 15 0 Province of Auckland, „ ... 461,250 „ „ 502,762 10 0 Province of Canterbury, „ ... 390,000 426,367 10 0 Province of Wellington, „ ... 84,250 „ „ 97,748 0 0 Province of Nelson, „ ... 28,880 „ „ 29,627 0 0 £ s. d. Hawke's Bay ... ... ... ... ... 37 10 0 Nelson ... ... ... ... ... ... 120 0 0 Canterbury... ... ... ... ... ... 5,603 10 0 Otago ... ... ... ... ... ... 5,771 15 0 Miscellaneous Eeceipts 11,532 15 0 22 7 10 £2,749,530 £3,004,235 0 0 General Government share of Expenses on account of Conversion ... ... 18,254 1110 Provincial Share of Expenses of Negotiation, Sale, and Conversion, together with accrued Interest, &c. :— Interest. Expenses. Auckland ... ... ... ... ... £5,453 3 11 Wellington... ... ... ... £2,747 2 1 1,163 10 7 Hawke's Bay ... ... ... 4 19 1 256 8 10 Taranaki ... ... ... ... ... 106 17 0 kelson ... ... ... ... 553 5 i0 241 8 7 Southland ... ... ... ... . 1814 7 0 Canterbury... ... ... 5,916" 3 4 5|761 0 7 Ota g° ••■ ... ... ... 6,586 7 6 4,641 10 3 £15,807 17 10 £19,438 6 9 35,246 4 7 Purposes specified in " The Public Belts Act, 1867: "— _, . Year 1867-68. Year 1868-69. Defence ■•• ■■• ... ... £97,571 2 2 £64,712 1 11 Electric Telegraph ... ... ... 35,215 6 2 27,940 7 11 Marine Survey ... ... ... 2,786 18 11 3,154 19 4 Lighthouses ... ... ... ... 3,462 6 9 3,702 8 4 £139,035 14 0 £99,509 17 6 v 1 £238,545 11 6 Deduct Recoveries ... 3,875 9 10 _, , , ■ 234,670 1 8 Debentures hypothecated... 100 000 0 0 Advances repaid ... ... .„ \'\ ['[ "[ "' idOfiOO 0 0 Discount on Bonds sold for purposes of " The Public Debts Act, 1867," viz. :— On £307,500 Bonds for General Government £9 225 0 0 „ £58,200 „ Hawke's Bay 1,800 0 0 „ £24,250 „ Taranaki ... 750 0 0 „ £258,602 „ Canterbury ... ... 7,998 0 0 „ £25,414 „ Otago... " 786 0 0 „ £415,839 „ Southland ... .." ...". 12,861 0 0 _ ,, ■ 33,420 0 0 Southland Provincial Debt ... ... 386,636 18 9 Taranaki Debt redeemed ... ... ... 21200 0 0 Surplus Kevenues due by Province of Otago ... ... ... ... 25,140 8 6 •Do- do. Southland ... ... ... 5^611 17 9 Lnraised portion of Provincial Loans, viz.: — Taranaki £24,064 11 5 HawkesBay ... ... ... 57,565 15 7 Canterbury... ... ... ... in ... 256,395 4 2 338,025 11 2 Balance on 30th June, 1869 ... ... ,., 80,114 8 7 £4,472,555 2 10 £4,472,555 2 10 4

B.—No. 2a.

It will be seen from the Abstract that New 5 per Cent. Bonds to the value of £4,091,000 were issued and £100,000 hypothecated, making together £4,191,000 prepared for issue up to the period of closing the accounts of the financial year 1868-9; that out of this gross sum new Bonds to the value of £3,004,234 were issued for the purpose of taking up £2,749,530 old Bonds ; and that the expenses of negotiation, sale, and conversion, including some miscellaneous charges, amount to £18,254 lis. 10d., plus £19,438 6s. 9d.=£37,692 18s. 7d. In reference to this last item, it is necessary to observe that, in order to meet the expenses incident to the management of the Loan, New 5 per Cent. Bonds were issued at 97. The loss bydiscount increases the liabilities which the Colony has incurred on account of these expenses, and this increased liability should be charged against the General Government and the Provinces in sums proportioned to the amount of old Bonds taken up for each ; but the Treasury has charged only the actual amount of the expenses. It is further to be observed, in reference to the incidental expenses, that the 7th clause of " The Consolidated Loan Act, 1867," provides that it shall be lawful to defray, out of the moneys borrowed under the Act, all charges and expenses incidental to raising the Loan. It is found, however, that the Treasury has recovered out of tho Provincial moiety of the Consolidated Eevenues the whole of the expenses apportioned to the Provinces ; while, on the other hand, the portion belonging to the General Government has been charged against the Loan, which arrangement leaves the General Government only burdened with the Interest and Sinking Pund. The Auditor is of opinion that unless the whole of the incidental expenses are charged against the Loan, a vote of the Legislature must be obtained, authorizing the Colonial Treasurer to defray the Provincial share out of the Provincial moiety of the Consolidated Eevenues. Pailing such an appropriation, all moneys recovered from the Provinces on this account should be refunded to the Provincial chests, and the Consolidated Loan charged with the amount. The overcharges are as follows:— Auckland, £5,781 3s. lid.; Nelson, £271 Bs. 7d.; Canterbury, £3,382 75.; Otago, £5,985 13s. 9d. In lieu of the above, the Provinces should be charged only the Interest and Sinking Pund on the new Bonds representing the above sums. Tho moneys raised under the authority of the Consolidated Loan Act are not applicable to the dis--charge of claims for Interest, and it is understood that the Colonial Treasurer, in making up the Consolidated Loan Account, has debited the Loan with the charges of accrued Interest on old Bonds as a temporary arrangement only. The sums so charged are being recovered from the Provinces, and placed to the credit of the Loan. These remarks apply also to charges under the head of " Public Debts Act, 1867," (page 99), where Interest on temporary loans, obtained on account of unissued Provincial Loans, is shown as defrayed out of moneys raised under the Consolidated Loan Act. As a matter of fact, the Interest was deducted at the time as a first charge on the gross proceeds arising from the sale of New 5 per Cents., and only the net proceeds paid into the Provincial chests. It is observed that, in calculating the liabilities of the Province of Southland, the Colonial Treasurer has quoted the New 5 Per Cent. Bonds at a lower price than that paid, on the plea that the cash was received in instalments extending over three months, by which deferred payments the real value of the bonds was reduced from £97 to £96 4s. 3|d., and has thereby increased the liabilities of the Province by the sum of £4,649 13s. 2d. The Auditor does not question the correctness of the Treasury valuation of the Bonds ; but seeing that tho Province is charged with Interest and Sinking Pund on the whole of the Bonds disposed of on its account, as if the money was all paid in on the day of raising,—namely, on the 15th April, 1868, — the Auditor maintains that the question of the value of moneys paid in by instalments is clearly got rid of. The Treasury, however, is not satisfied with charging the Province the actual amount of Bonds disposed of from the 15th April, although in doing so it would require the Province to discharge the whole of the Interest and Sinking Pund that it can itself be called upon to pay, but it adds £4,649 13s. 2d. to the sum of the Bonds actually issued, and then charges Interest and Sinking Pund on the increased amount from the day on which the Bonds were sold, namely, from the 15th April, 1868 ; by which it will eventually make £4,649 13s. 2d. at the expense of the Province of Southland. It is submitted that the liability of the Province of Southland on the 30th June, 1869, should bo reduced from £428,700 to £424,050 6s. lOd. It is provided by " The Public Debts Act, 1867," that if any of the Loans authorized to be raised by any Provincial Ordinance shall not have been borrowed, the Colonial Treasurer may direct that the balance of such Loan may be sold, and the moneys realized paid over to the Provincial chest. Under this provision, a Loan of £25,000, authorized under " The Taranaki Loan Ordinance, 1862," was raised by the sale of New 5 per Cent. Bonds. Before, however, the new Bonds were disposed of, a sum of £20,000 was borrowed in London, at the rate of 4 per cent, interest, and paid over to the credit of the Province at the Bank of New Zealand. Subsequently the New 5 Per Cents, were issued, and the Interest and Sinking Pund on £25,000 were duly charged on the moiety of the Consolidated Eevenues payable to the Province. Prom the date on which Interest and Sinking Pund were charged on the new Bonds, the charge of 4 per cent, interest on the £20,000 borrowed in anticipation of the Loan should have ceased; but on reference to the Accounts, it is found that for some time Interest on both sums charged. To this double charge for Interest the Auditor objects. "When the new Bonds were sold for cash, the borrowed money could have been at once returned to the brokers ; if, however, the Treasury found it convenient to retain the money for general purposes, the Province ought not to be damaged on that account. It is submitted that the overcharge should be refunded to the Province. The same remarks apply to the transactions on account of the unissued Bonds of the Provinces of Hawke's Bay and Canterbury, in which the overcharges are as follows:—Hawke's Bay, £469 17s. lid.; Canterbury, £2,976 Os. 3d. "With the view of bringing out clearly the amount of New 5 Per Cents, issued, the amount hypothecated, and the liabilities of the Colony under the Public Debts Act and the Consolidated Loan Act, tho Auditor has reconstructed the Loan Account, and in doing so has eliminated the charges on the Ordinary Eevenues. Chaeles Knight, 20th August, 1870. Auditor.

See Southland Account herewith Sf-SSi? f °L 3 i-^4'050 6s-loa-

£ gl3 g. j, Explanatory statements herewith.

11

ACCOUNTS OE THE COLONIAL TREASURER.

B.—No. 2a.

ACCOUNTS with several PROVINCES for MONEY RAISED, under the Consolidated Loan Act, for purposes specified in Schedule B, Public Debts Act.

12

REPORT BY THE AUDITOR-GENERAL ON THE

1868. Taranaki. £ 6. d. pr. 15. Cash from the Sale of £25,000 New 5 ner Cent. Bonds 24,250 0 0 1868. Taranaki. £ s. d. Mar. 20. Paid Bank of New Zealand, in London, amount of Provincial Overdraft 20,000 0 0 August. Paid to Provincial Treasurer, by a Draft on London ... 3,613 12 8 Mar. 7. Brokerage paid in London on raising a Temporary Loan to provide for the Debt due to the Bank, before the New 5 per Cent. Bonds could beissued,ioflperceut.on£20,000 50 0 0 „ „ Interest on the Temporary Loan, from 7th March, 1868, to 15th April, 1868, being the day preceding that on which Interest commences to be charged under the 44th clause of "The Public Revenues Act, 1867," 40 days, at 4 per cent., on £20,000 87 13 5 Apr. 15. Charges and Expenses on Negotiation of Consolidated Loan, £37,531 12s. 5d., proportion chargeable on Taranaki —( Vide printed Account, p. 91) 106 17 0 £23,858 3 1 Balance duo to Province 391 16 11 £24,250 0 0 £24,250 0 0 Treasury Charges—(p. 99 printed Statement). £ s. d. Payment to Provincial Account 23,613 12 8 Interest and Charges on Temporary Loan ... 450 18 9 Portion of Expenses 106 17 0 £24,171 8 5 Audit Charges as above ... ... ■•■ 23,858 3 1 Excess £313 5 4 1868. SawTce's Bay. £ s. d. .pr. 15. Cash from the Sale of £60,C00 New 5 per Cent. Bonds 58,200 0 O 1868. Hcnclces Bay. £ s. d Mar. 20. Paid Bank of New Zealand, in London, amount of Provincial Overdraft 30,000 0 0 August. Paid to Provincial Treasurer, by a Draft on London 20,889 7 6 Mar. 7. Brokerage paid in London on raising a Temporary Loan to provide for the Debt due to the Bank, before the New 5 per Cent. Bonds could be issued, i of 1 per cent, on £30,000 75 0 O „ „ Interest on the Temporary Loan, from the 7th March, 1868, to the 15th April, 1868, being the day preceding that on which Interest commences to be charged under the 44th clause of " The Public Eevenues Act, 1867," 40 clays, at 4 per cent., on £30,000 ... 131 10 2 Apr. 15. Charges and Expenses on Negotiation of Consolidated Loan,£37,531 12s. 5d., proportion chargeable on Hawke's Bay— (Vide printed Account, p. 91) 256 8 10 £57,352 6 6 Balance due to Province ... 847 13 6 £58,200 0 0 £58,200 0 O Treasury Charges—(p. 99 printed Statement). £ s. d. Payments to Provincial Account 56,889 7 6 Interest and Charges on Temporary Loan ... 676 8 1 Portion of Expenses ' 256 8 10 £57,822 4 • 5 Audit Charges as above ... ... ... 57,352 6 6 Overcharge £469 17 11

ACCOUNTS OE THE COLONIAL TREASURER.

13

B.—No. 2a

ACCOUNTS with several PROVINCES for MONEY RAISED, &c—continued.

1868. Canterbury. .pr. 15. Cash from the Sale of £266,600 New 5 per Cent. Bonds £ b. d. 258,602 0 0 1868. Canierhury. £ 8. d. Mar. 20. Paid Bank of New Zealand, in London, for Provincial Account ...190,000 0 0 August. Paid to Provincial Treasurer, by a Draft on London 33,311 6 2 „ Paid to Timaru and Gladstone Board of Works, by a Draft on London 28,800 0 0 Mar. 7. Brokerage paid in London on raising a Temporary Loan to provide for the payment to the Bank, before the New 5 per Cent. Bonds could be issued, i of 1 per cent, on £190,000 475 0 0 „ M Interest on the Temporary Loan, from the 7th March, 1868, to the 15th April, 1868, being the day preceding that on which Interest commences to be charged under the 44th clause of " The Public Revenues Act, 1867," 40 days, at 4 per cent., on £190,000 ... 832 17 9 Apr. 15. Charges and Expenses on Negotiation of Consolidated Loan, £37,531 12s. 5d., proportion chargeable on Canterbury — (For above transactions, vide printed Account, pp. 91, 95, and 99) 2,959 3 7 £256,378 7 6 Balance due to Province 2,223 12 6 £258,602 0 0 i £258,602 0 0 Teeasuky Chaeqes—(p. 99 printed Statement). £ e. d. Payments to Provincial Account ... ... 252,111 6 2 Interest and Charges .on Temporary Loan ... 4,283 18 0 Portion of Charges ... 2,959 3 7 £259,354 7 9 Audit Charges as above 256,378 7 6 Overcharged £2,976 0 3

EEPORT BY THE AUDITOR-GENERAL.

B.—No. 2a..

14

STATEMENT showing the DISPOSAL of the NEW 5 PER CENT. BONDS issued under "The Consolidated Loan Act, 1867."

£ B. d. New 5 per Cents, disposed of ... ... ... ... ... ... 4,091,000 0 O Cash advances on hypothecation of £100,000 New 5 per Cents. .... ... 80,000 0 0 Schedule A, " Public Debts Act, 1867." £ s. d. New 5 per Cent. Bonds, issued for conversion of old Bonds. (Interest and Sinking Fund chargeable on General Government and Provinces) :— G-eneral Government, on £1,397,7 00 old Bonds cancelled ... 1,525,937 10 0. „ „ 3,150 Taranaki Bonds cancelled 3,354 15 0 „ „ 21,200 ,, „ 21,855 6 0 Province of Otago, „ 383,400 Provincial Bonds „ 418,437 15 0 „ Auckland, „ 461,250 „ „ 502,762 10 0 „ Canterbury,, 390,900 „ ., 426,367 10 0 „ Wellington,, 84.250 „ „ 97,748 0 0 „ Nelson, „ 2S,880 „ „ 29,627 0 0 £ 5. d. 3,026,090 6 0 Iggp" The payments on account of accrued Interest on Provincial Bonds, amounting to £15,807 17s. 10d., are excluded from this Account. They are first charges on the Provincial moiety of the Consolidated Revenues. The Provincial share of expenses attending the negotiation and sale of the unraised portions of Provincial Loans, amounting to £3,322 9s. 5d., have also been excluded. These expenses were deducted out of the gross proceeds arising from the sale of the Loans, and only the nett amount paid to Provinces. New 5 per Cent. Bonds disposed of for cash to discharge expenses on account of conversion. (Interest and Sinking Fund on the Bonds chargeable on General Government and Provinces) :— £ s. d. £ s. d. To discharge 18,254 11 10, being General Government share ... 18,744 6 0 „ 5.453 3 11 „ share of Province of Auckland ... 5,599 9 0 „ 1,163 10 7 „ „ Wellington ... 1,194 9 0 „ 1,814 7 0,, „ Southland ... 1,863 1 0 241 8 7 „ „ Nelson ... 247 19 0 „ 2,801 17 0 „ „ Canterbury... 2,888 10 0 „ 4,641 10 3 „ „ Otago ... 4,766 6 0 £35,304 0 0 Deduct recoveries, amounting to £22 7s. lOd. ... 23 1 9 35,280 18 3 Schedule S, "Public Debts Act, 1867." New 5 per Cents, disposed of for cash, for the purpose of taking up Southland Certificates, amounting to £386,636 18s. 9d. New 5 per Cents, disposed of for cash, to discharge Surplus Revenues due by Provinces. (Interest and Sinking Fund chargeable on Provincial moiety of Ordinary Revenues) :— £ a. d. £ s. d. 25,140 8 6 due by Province of Otago ... ...25,917 18 0 5,611 17 9 „ Southland ... 5,785 8 0 New 5 per Cents, disposed of for cash, to discharge expenses provided for by " The Public Debts Act, 1867." (Interest and Sinking Fund being General charges) :— Tear 1867-08. Tear 1868-69. £ s. d. £ s. d. Defence ... ... ... 97,571 2 2 64,712 1 11 Electric Telegraph ... ... ...35,215 6 2 27.940 7 11 Marine Survey ... ... ... 2,786 18 11 3,154 19 4 Lighthouses ... ... ... 3,462 6 9 3,702 8 4 £139,035 14 0 £99,509 17 6 398,594 17 0 31,703 6 0 — y £4,171,000 0 0 £238,545 11 6 Deduct recoveries ... ... 3,875 9 10 New Bonds issued to discharge ... £234,670 18 New 5 per Cent. Bonds disposed of for cash, on account of the unraised portions of Provincial Loans, viz. :— Hawke's Bay, £58,200 cash, raised by sale of new Bonds amounting to... Taranaki, 24,250 ,, „ „ Canterbury, 258,602 „ „ „ Balance 241,927 17 0 60,000 0 0 26;000 0 0 206,600 0 0 85,802 15 9 £4,171,000 0 0