B.—lo.

2

That of this sum not less than ninety-four thousand four hundred and ninety-one pounds eleven shillings and tenpence (£94,491 11s. lOd.) at the least should have been expended on improving the bar and the Lower Harbour, whilst in fact only thirty-eight thousand seven hundred and thirty pounds and fourpence (£38,730 os. 4d.) has been so expended, and the Board have now in hand of the amount so raised ten thousand pounds (£10,000) only. That, in addition to the thirty-eight thousand seven hundred and thirty pounds and fourpence (£38,730 os. 4d.) alleged to have been actually expended in the Lower Harbour, the Board, through its acting-chairman, claims to be entitled to debit against the proportion of the loan to be expended in the Lower Harbour various items amounting in the whole to forty-six thousand two hundred and forty-five pounds ten shillings (£46,245 10s.). That this latter amount comprises, among other items, the following : — Value of plant removed to heads ... ... ... £2,777 10 0 Half-cost of dredge ... ... ... ... 23,850-0 0 Half-cost of tugs ... ... ... ... 6,750 0 0 £33,377 10 0 That your petitioners are advised that for various reasons none of these items can properly be charge 1 against the proportion of the loan to be expended in the Lower Harbour. That the members of the Board appointed by and representing the citizens of Port Chalmers on the Board have, ever since taking their seats at the Board table, endeavoured to have that portion of the loan allocated for the improvement of the bar and Lower Harbour set apart for that purpose, but that the other members of the Board have persistently refused to do so. Your petitioners therefore pray that you cause a special audit to be made, in terms of the one hundred and eighty-sixth section of " The Harbours Act, 1878," and that, should the result of such audit show (as your petitioners allege it will) that a breach of trust has been committed by the Board, you cause such proceedings to be taken in the interests of the public as shall enforce compliance by the Board with the terms of the statute. And your petitioners will ever pray. E. M. G. Allen, Mayor. John Deysdale, M.D., J.P. D. A. DeMans. William Eeid, J.P. William Mueeay. David Law. Alexandeb McKenzie.

No. 2. The Seceetaey to the Tbeasuey to the Conteollee and Auditob-Genebal. Sie,— Wellington, 12th October, 1885. I have the honour to inform you that, pursuant to section 33 of " The Public Eevenues Act, 1878," and section 186 of "The Harbours Act, 1878," His Excellency the Governor has been pleased to direct that a special audit of the accounts of the Otago Harbour Board be made by you, with a view to determining the accuracy or otherwise of the allegations contained in a petition from the residents of Port Chalmers to His Excellency (copy enclosed). I have, &c, J. E. FitzGerald, Esq., C.M.G., Controller and" J. C. Gavin. Auditor-General, Wellington.

No. 3. The Contbollee and Auditob-Geneeal to His Excellency the Govebnob. Sie, — Dunedin, 26th October, 1885. In obedience to your Excellency's directions, conveyed in the letter of the Secretary to the Treasury of the 12th instant, I have made full inquiry into the complaints made in a memorial relating to the accounts of the Otago Harbour Board, forwarded to your Excellency in a letter from Mr. Macandrew of the 18th September, 1885. The accounts of the Harbour Board having been duly audited year by year by Mr. Livingston, the Provincial District Auditor, and the accuracy of the figures having been thus ascertained, it was unnecessary for me to do more than inquire into the mode in which the expenditure has been charged to the several accounts of which the memorialists complain. Prior to the passing of "The Otago Harbour Board Further Empowering Act, 1882," the only authority for the expenditure of money by the Board was conveyed in the 172nd section of "The Harbour Boards Act, 1878," which enacted that the harbour fund should " be expended and laid out in the construction, maintenance, and repair of harbour works within the port, or for the payment of interest and sinking fund (if any) upon moneys borrowed for the purposes of such works, and generally in the payment of expenses incurred by the Board in carrying out this Act." The powers thus conveyed sanction the execution of all works which, in the opinion of the Board, might be necessary for the improvement of the harbour, including the purchase of dredges, punts, tugs, and plant of all kinds required to aid in effecting such improvements. And it must be noted that the