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F. W. FLANAGAN. I

90. From what I can learn from those newspaper articles it is sought to be made out that the State has parted with an interest that should belong to it. In making your valuation you have been fairly satisfied that you have conserved the interests of the State? —Yes, decidedly. 91. Did you take into account the tenure that those tenants had? —No. It is not a question of a particular tenure; it is a question of the unexpired term of the lease and rental. 92. That is what I mean? —These are essential factors in getting at the interests of lessors and lessees. 93. It is a renewable lease for all time? —Yes. 94. Only there is revaluation at different periods?— Yes. 95. You have simply taken the present-day value of what the Government's interest would be at the end of the thirty-three years —in other words, if you were to invest the money that the State will now get from those tenants, that money, at the end of thirty years, would produce the full value? —I have already demonstrated that. 96. At the next term —following the first renewal —the tenant still retains the right to his goodwill in the lease? —Yes, to his improvements only. His goodwill in the land is exhausted at the termination of the lease. 97. But the same thing would happen every term? —Yes, if the lessee accepted a renewal of the lease. 98. And if the tenant wished to purchase, the State could only claim the value at the date of purchase ? —Yes. 99. I understood you to say that your Department was very careful not to be led away by values of speculators who were trying to raise the value of land in the country : was I right? — Yes. Valuers are specially warned to ignore altogether speculative values. 100. In connection with these leases, do you think there was necessity for your valuers to be careful in the values they put upon the land? —Yes, for this reason : that it was a duty imposed on the Valuation Department by special Act. As I have already pointed out, that Act directs that the valuation has to be made in accordance with the Valuation of Land Act, and as it is prescribed by that Act that valuations shall be made as at the dates of valuation, prospective values cannot be accepted as fair selling-values. 101. Do you, as representative of the Valuation Department of the State, consider that you have put a fair selling-value upon that land in the price that you have fixed —that you have put a fair value on it, conserving the interests of the State and at the same time the interests of the tenants? —I do. 102. The Chairman.] The point has been raised whether these lands are likely to increase or decrease in value in the future. I want to ask you if you know of any lands situated adjacent to cities that have decreased in value within the last few years?— Yes. There is no need to go further afield than Wellington suburbs for examples. Land at Island Bay, Miramar, Karori, Lower Hutt, Petone, Upper Hutt has decreased in value, and is unsaleable even at reduced prices. 103. Hon. Mr. Massey.] Reference has been made to these New Lynn leases carrying a perpetual right of renewal. Such being the case, do you think that a tenant could sell his goodwill in any one of these leases if he felt so inclined? —If one endorsed the opinions of the writer of the article in the Auckland Star and others who hold the view that the land is undervalued, ho should be able to sell it at a high figure. Ido not think, however, I would be wrong in stating that the lessees could not find purchasers for their interests in the leases. 104. When he acquires the freehold does he give up his interest in the goodwill —does he lose the goodwill? —Yes. 105. Mr. Witty."] Has not the State a perpetual right to any increase in value at each renewal —each revaluation ? —Yes; at the end of thirty-three years the land is revalued, but I cannot say whether there will be an increase or decrease in value. 106. But there is that right? —Yes. 107. Then if the State sells to the tenant it sells this right, and therefore cannot participate in any increase in the future?— No. The increase is, however, problematical, and the tenant may under his first lease self the whole of the increased value. 108. lam not speaking of the tenant; lam speaking of the State now. If the State sells to the tenant, the State sells the right to the increase for all time—that is, it can get no more, can it?— No. 109. It sells it for all time?— Yes. 110. Then in that case the State must be a loser in the end?—lt does not follow. That opens up questions of policy. 111. The question, I think, was very simple. First of all, has not the State the perpetual right of increase should the value increase, and the answer to that was Yes. Then, if the State sells to the tenant during the first lease, it has no further prospective value at any revaluation—that is, an increase in rent ?—That is obvious. 112. Hon. Mr. Massey.] And if the land decreases in value the State, of course, will have been saved from any loss?— That is so. 113. Mr. Anderson.] Did the Government interfere with your Department in any way in making these valuations? —Certainly not. 114. Did they make any suggestions?— No. 115. As soon as the land becomes freehold it becomes liable to taxation? —Liable to land-tax. 116. Mr. Bobertson.] You referred to a particular section, the present-day value of which I think was £120 and the original value £30. You stated that if the tenant transferred his lease he would be able to acquire the whole of that difference in value for himself?— Yes. 117. Would not that be modified by this consideration, that at the end of the thirty-three years —the first term of the lease —a revaluation would take place and the rent be increased accordingly?