"Faking" The Public Accounts.

How Seddonian Surpluses are Produced.

"On undeniable facts it appears more than doubtful whether there has yet been one shilling of a genuine surplus from legitimate revenue during the whole of the Seddon Administration."

These are the words of one of the soundest critics of the Govern-ment's finance in New Zealand, Mr. John Duthie, M.H.R., in the course of a letter to the Wellington Post. The Premier had recently stated at Pahiatua that the transfer of surpluses from revenue to public works up to the 31st March last had during his term of office amounted to nearly five millions. Mr. Duthie drew attention to the fact that at the date of the last published accounts (the 31st March, 1904) the transfers amounted to only £3,725,000, and that of this £1,150,888 did not arise from revenue, but was the proceeds of sales of land which had been bought out of borrowed money. These proceeds by all Governments prior to the present had been directly allocated to public works purposes. "Stripped of this item, now falsely called revenue, the total transfers since page 14 1892 from revenue account were only £2,574,112. Mr. Massey claims that these surpluses are bogus, being produced by charging items of ordinary expenditure to public works—i.e., paying out of the loan fund instead of from the revenue, and that the alleged surplus from revenue is so produced. Mr. Seddon admits that works had been so charged, but denies the extent. Presumably, the expenditure on public buildings, additions to open railways and contingent defence, are departments where such manipulations most largely have been made, but the system pervades the whole Government administration."

Mr. Duthie then went on to explain how the Telegraph and Telephone Department is made to contribute to this juggling. "If" he said, "you examine the accounts of that department for the last five years (1900-1904) you will find that the total Charge against expenditure for maintenance amounts to £115,021. Yet, by table 22, the admitted cost of this maintenance was £195,136 and the difference (£80,115) has served to swell Mr Seddon's make-believe surplus. To understand how this is managed you will find that stores purchased for construction are paid for from loan funds; but, under the Government system, all required for maintenance are taken from these loan-paid stores and never charged against maintenance. This, probably, is not even the limit of how the Telegraph accounts mislead, since (as in other departments) much that is openly charged to construction is spent on replacements, which should properly be charged against revenue. No one without access to the departmental books can accurately state the extent to which this system of deception prevails. The introduction into the colony's accounts of this hocus pocus system, which was started by closing the land fund account in 1892, and treating its proceeds ever since as revenue, is evidence of a long-devised intention to confuse the accounts, and to render accurate criticism impossible."

Mr. Duthie concluded with the words standing at the head of this article, and the Post, after verifying his figures declared his conclusions to be irresistible. And so the whole structure of Seddonian finance, the subject of so much self-laudation by Mr. Seddon, is shown to rest on a rotten foundation—on surpluses which do not really exist at all.