D.—2.

All items manufactured in railway workshops for stock, including the output of the foundries in the several centres, will be taken over by the Stores Branch, with the object of co-ordinating and regulating manufactures to actual necessity. The accounting systems are being revised to assist in the control of stores, and for the purpose of dovetailing and simplying methods and accounts and facilitating procedure in the reorganizations in progress. The matter of establishing reclamation depots and a special sales organization within the Stores Branch to deal more effectively with stores taken out of service and capable of being reconditioned for further service, or of being profitably disposed of by sale, is being investigated. During the year tenders were called for machinery required in connection with the reorganization of the locomotive workshops. The needs of the Department in respect to this machinery were extensively advertised in England, New Zealand, and in British Dominions overseas, and the fullest opportunity afforded manufacturers to tender. STAFF. The total number of staff employed on the 31st March, 1926, not including those engaged on works chargeable to capital, was 18,464 and the average number actually at work throughout the year was 17,990, as compared with 17,246 for the previous year. The average number of men engaged on works charged to capital was 1,058, as against 2,277 last year. Fifty seven members of the Second Division were promoted to the First Division, 505 members resigned, 95 retired on superannuation, 48 died, 95 were dismissed, and 1,215 engaged. The sum of £-37,857 was paid under the Workers' Compensation Act during the year to members who sustained injuries in the execution of their duties. Throughout the year under review the conduct of the staff has been good, and the Board desires to acknowledge the loyal support which has been accorded by members of all ranks of the Service. The exceptionally heavy passenger traffic due to the Dunedin Exhibition called for the wholehearted co-operation of the staff, and it is pleasing to note that all members concerned rose to the occasion, with the result that the traffic was expeditiously handled without accident or any serious delays. The cordial relations which exist between the management and the staff were not disturbed by any industrial troubles during the year. Several concessions which were withdrawn from certain sections of Division II during the previous year have now been restored —such as night rates, double rates for all time worked on Sunday, &c. It is with regret that the Board has to place on record the death, through accident, of the late Staff Superintendent, Mr. W. 0. Ennis. This officer was, at the time of his death, engaged upon the work of staff reorganization, and it is regretted he was not spared to carry these duties to finality. Further changes have been made during the past financial year in the direction of improving staff conditions. With regard to filling Division I vacancies, involving promotion, which arise from time to time, it frequently occurred that officers who were offered promotion involving transfer could not accept such promotion owing to domestic or other reasons. In accordance with the regulations such officers were required to forfeit promotion for a term of two years. A new departure has been made, applications now being invited in connection with all vacancies involving promotion. Under this system any member who may be in order but does not desire promotion to a particular position which may be advertised is at liberty to refrain from applying for such position without incurring forfeiture of promotion for two years. The scheme outlined in the annual report of last year in regard to discipline is now ready for adoption, and will be put in operation shortly. At the present time a classification committee, consisting of an officer of the Railway Department, an officer from the Post and Telegraph Department, and an officer from the Public Service, are engaged in reviewing all First Division positions in the Service with a view to determining the relative value of such positions and. ensuring uniformity of classification. During the year the method of recording particulars of the service and classification of staff has been brought into line with the system in operation in other sections of the Public Service. The four officers mentioned in the last annual report who were sent abroad to study the working conditions in other countries have returned to the Dominion, and they have furnished reports which will prove of considerable value to the Department. At the present time Mr. F. C. Widdop, M.lnst.C.E., Chief Engineer, Maintenance Branch, is absent from the Dominion in quest of information connected with the working of his branch. As soon as the necessary arrangements can be made it is proposed to send a number of the Department's- most promising junior officers abroad for training on the railway systems of other countries. This will, it is anticipated, enable the Department to keep in touch with the latest methods of railway-working. It is probable these visits will be reciprocal, and that members from overseas railway systems will visit the Dominion in order to familiarize themselves with the conditions and methods of working which obtain in New Zealand. The system of temporary exchange of officers is in operation in several of the American and British railway companies, and the results obtained have proved eminently satisfactory.

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