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An analysis of the actual expenditure on maintenance in each Island as compared with the number of motor-vehicles in each Island at the 31st March, 1927, gives the following result, expressed in percentages of the Dominion totals : — North Island — p er Cent. Maintenance expenditure .. .. .. .. .. .. 64-86 Motor-vehicles .. .. .. .. .. .. .. 61-86 South Island—Maintenance expenditure .. .. .. .. .. .. 35-14 Motor-vehicles .. .. .. .. .. .. .. 38-14 These figures show that, although the Board is treating the South Island more favourably as regards its average rate of subsidy over the whole, there is a balance of expenditure in favour of the North Island to the extent of 3 per cent. The corresponding figure for the year ending 31st March, 1926, was 4-4 per cent, in favour of the North Island. In accordance with the direction contained in section 21 of the original Act, and following on the Board's resolution passed in May, 1925, an apportionment of the tire duty and license fees collected for the year ending 31st March, 1927, was made between the two Islands in proportion to the number of motor-vehicles registered in each Island on that date. In making this apportionment the interest and sinking fund on moneys borrowed for construction work in each Island have been charged against the allocation to each Island. The balances to the credit of the North and South Islands respectively were £317,823 and £324,920. Shortly before the expiration of the year under review the Hon. the Minister of Finance informed the Board that he did not propose to borrow any funds for construction purposes for the financial year 1927-28 under section 12 of the Main Highways Act, 1922, and at the same time suggested that the Board should exercise the powers contained in subsection (2) of section 15 of the parent Act. The latter section provides that there may be at any time transferred from the Revenue Fund to the Construction Fund any moneys which in the opinion of the Board are not required for the purposes of the Revenue Fund The policy of the Board of gradually absorbing the surplus in the Revenue Fund by increased maintenance subsidies and a review of the position of the Revenue Fund, however, especially in the light of the increasing demands on this fund, made it apparent that such a transfer could not be permanently made without seriously depleting the surplus in hand, on the strength of which surplus the Board had framed its recent policy and had recommended payment of the increased maintenance subsidy of £1 10s. for £1. It was therefore agreed that the transfer should be of a temporary nature only, and that provision should be made for the reimbursement of any amounts so transferred to the Revenue Fund. In order to retain the allocation of the revenue between the two Islands in terms of section 21 of the original Act, the following resolution was passed by the Board : " That the moneys temporarily transferred from the Revenue Fund to the Construction Fund shall be allocated according to their use between the North and South Islands oil the basis now in force in regard to the distribution of revenue funds received from motor-taxation." For the year ending 31st March, 1927, the appropriations and expenditure under the Construction Fund were as follows : —

All analysis of the Board's expenditure and the expenditure by local authorities under the Construction Fund shows the following position : —

I I ! I a -i r I r ! Percentage of Authorization. I Appropriated. Expenditure. j Expenditure to I I Appropriation. £ £ ' £ North Island .. .. 600,595 409,810 424,353 103*55 South Island .. .. 181,273 123,690 116,009 J 93*79, Administration charges and 21,500 21,500 33,500 155'81j compensation for accidents to workmen Totals .. .. 803,368 i 555,000 573,862 10340

L oca ] Percentage of Percentage of n B + °?w- Authorities Total. Board's Con- Local Authorities Contribution. Contribution . tribution to Contribution Total. to Total, I £ £ £ North Island .. .. 424,353 225,042 649,395 65-35' 34-65 South Island .. .. 116,009 30,818 146,827 79*01 20-99 Totals.. .. 540,362 255,860 796,222 67-87 32-13