XVII

B.—l [Pt. ll],

are definitely contrary to law, as the Act authorizes the application of the sinking fund to the redemption of loans. The weakness lies in the failure of the Act to provide, as should be done in all such cases, that the interest saved by the redemption of securities from the sinking fund should be credited to the sinking fund until the fund is sufficient to repay all the loans covered thereby. This weakness has resulted, in the present case, in the statutory provision for sinking fund being practically ineffective, and it would appear to be advisable to make the position clear by legislation. It may reasonably be argued that, as the Act provides that the sinking fund shall be invested in the same manner as other moneys held by the State Advances Office, it might be advisable to repeal the provisions relating to the sinking fund altogether. If, however, it is considered advisable to continue the principle of providing a sinking fund, I would suggest for consideration that it should be modelled on the lines of the scheme adopted, for the redemption of the public debt. Repayment of the Public Debt. Under the operation of the Repayment of the Public Debt Act, 1925, public-debt securities of a nominal value of £3,877,563 13s. 3d. had at the 31st March, 1929, been redeemed and cancelled at a cost of £3,849,927 2s. 4d. These transactions have effected an annual saving of interest to the Consolidated Fund equal to the difference between 3| per cent, (fixed by the Act) and the rate which was previously payable on the securities redeemed. The following statement shows the rate of interest that was payable on the redeemed securities, and indicates that, an annual saving of interest to the Consolidated Fund amounting to £46,782 os. 4d. will be effected as a result of the redemptions to the 31st March, 1929 : —

The following statement shows the amount of the debt (including State Advances Debt) excluded from the provisions of the Repayment of the Public Debt Act, 1925, as at the 31st March, 1929 :—- Accounts. Amounts outstanding, 31st March, 1929. Debt for which special sinking funds are provided — £ s. d. £ s. d. Electric Supply Account .. .. .. .. 9,159,262 15 11 Nauru and Ocean Islands Account .. .. .. 522,120 0 0 Samoan Loan Suspense Account .. .. .. 124,000 0 0 State Coal-mines Account .. .. .. .. 162,601 0 7 Westport Harbour Account.. .. .. .. 700,000 0 0 State Advances Account— £ s. d. Treasury debt .. .. 21,563,205 9 3 State Advances debt.. .. 11,971,801 5 9 33,535,006 15 0 Total debt with separate sinking funds .. .. .. 44,202,990 11 6 Debt funded with Imperial Government —• £ s. d. Land for Settlements Account .. .. .. 34,847 6 0 Naval Defence Act Account .. .. .. 644,981 14 9 Public Works Fund—General Purposes Account .. 176,193 3 4 War Expenses Account .. .. .. .. 24,296,995 16 0 Total funded debt .. .. .. •• •• 25,153,018 0 1 Total debt not subject to the Repayment of the Public Debt Act, 1925 .. £69,356,008 11 7 Summary of Total Debt as at 31st March, 1929. £ s. d. Debt not subject to the Repayment of the Public Debt Act, 1925 (as above) .. 69,356,008 11 7 Public debt subject to the Repayment of the Public Debt Act, £ s. d. 1925 194,835,974 5 6 Rural Advances loans .. .. .. •• 1,591,850 0 0 196,427,824 5 6 Total debt as at 31st March, 1929 .. .. •• £265,783,832 17 1

iii—B. l [Pt. ll].

Nominal Value of Securities redeemed. "Rate of Total Cost Annual Saving Interest. m i 1 I m * r i of Redemptions. in Interest. Total to Year 1928-29 ' Total to 31st March, 1928. ' 8 31st March, 1929. Per Cent. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. 4 404,053 13 3 850,000 0 0 "1,254,053 13 3 1,242,366 2 4 6,270 5 4 4J 880,850 0 0 .. 880,850 0 0 865,472 5 0 8,808 10 0 5 758,000 0 0 196,000 0 0 954,000 0 0 953,446 5 0 14,310 0 0 5£ 300,500 0 0. .. 300,500 0 0 300,482 10 0 5,258 15 0 5| 1.3,900 0 0 .. 13,900 0 0 13,900 0 0 278 0 0 6 474,260 0 0 .. 474,260 0 0 474,260 0 0 11,856 10 0 2,831,563 13 3 1,046,000 0 0 3,877,563 13 3 3,849,927 2 4 46,782 0 4