30in. main east of Northam is 2s. 6d. The relation between these two standards is considered a fair one, and it is doubtful if any attempt to establish relative prices on an exact apportionment of actual benefits and costs would be satisfactory even if practicable.

8539. When you say the standard price west of Burracoppin is 2s. 6d. that, of course, refers to supplies from the main only ?—Exactly. The extensions get their water free. This relation is a changing factor and it is undesirable to make frequent changes in water prices. The price of 2s. 6d. to settlers served by the 30in. main (and also by some of the earlier guaranteed extensions), was fixed in the earlier years when the standard price for mining supplies at Kalgoorlie price was increased to 7s ., there was no corresponding increase made in price in agricultural districts. As a fact, each industry in this connection materially helps the other. It is obvious that the farming community could not be supplied at precent costs, except for the large deliveries to the mines, and the mines receive some benefit from having a small portion of the general expenses recouped from water rates in the western districts. Your Question 5 reads : - " Details showing how the price charged for water to the settlers is made up. " My foregoing remarks show the cost of supplies from the agricultural extensions as arrived at and the prices are calculated to bring in a return to cover those costs, exclusive of the cost of the water at point of off-take. The actual price for rated extensions is arrived at by dividing into the annual costs the quantity which the mains are designed to supply under the existing conditions except in summer. The designed capacity of the mains governs the capital cost. The capital cost governs the annual expense. The annual expense governs the rating. The capacity and the annual expense taken together govern the price. The price and the annual rate taken together govern the quantity allowed in return for the rate. These factors apply generally throughout the rated extensions. It will be seen that these factors are closely interwoven and that interference with any of them may upset the whole system. The department, it may be held, is under an obligation to keep in reverse sufficient capacity to supply every rated consumer with at least his full rate allowance, and to do this within a reasonable period. This is rather an important consideration because it may be said we have plenty of capacity not used, and why do we not use it. The question to be considered is determined by the obligation to keep in reverse enough water to fill the contract with all the ratepayers.

8540. You provide a certain quantity of water which you undertake to supply within a period of three months. If the settlers do not take that water, you have it in reverse and do not use it ? - That is so.

8541. By Mr. PAYNTER : If every man took his full supply, would that bring down the cost ? - No, the position would be the same.

8542. By the CHAIRMAN : Is the 30in. main fully taxed ? - At certain times of the year it is. It is generally fully taxed in summer.

8543. Would you say that it would be fully taxed at the season of the year when farmers require their maximum supply ? - Yes, that is the unfortunate part of it. These months are January, February and March. The position in that respect may be easier as time goes on; it is possible that the mining consumption will decrease and the indications are that it will decrease. This is a very important consideration because if it is there is no obligation on the department to keep in reserve enough water to supply the full rebate and that rebate might be available for excess consumption for those who require to use it, and at perhaps a reduced rate. The department is now going into that and we shall shortly make representations to the Minister as to whether it will be a safe proposition and fair to the ratepayers generally to offer an inducement to the settlers to use more excess water.

8544. Our information is that settlers are entitled to 30 million gallons, out of which they only use 13 million gallons, so there are 17 million gallons which it is paid by rate. That 17 millions might therefore be supplied at a reduced price ? - It is only reasonable to assume that the ratepayers will year by year require more water, but the question is whether some portion of that might not be used. A reduction in price would affect very few customers, as only about 60 out of 440 ratepayers exceed the present rate allowance and, as a rule, those who exceed it are better able to pay the full charges than those who do not. It was shown. I believe, during an inquiry into the South Australian system, that on account of the large quantity allowed in return for rates due to a low price, the department was obliged to hold in reserve and unutilised, capacity that would otherwise have been available for extensions. Even now after all the years those systems have been in use, the average quantity taken falls short of the average rate allowance by about 9,000 gallons per service per annum. So that as a fact, the farmers there, as well as the farmers here, are paying more per thousand gallons than the normal prices. It has been held in the Water Department that the Farmer is more concerned with keeping down his total annual water bill than he is with reducing the nominal price per thousand gallons. A reduction beyond certain limits in the price per thousand gallons may tend to increase the farmer's annual water bill than he is with reducing the nominal price per thousand gallons may tend to increase the farmer's annual water bill by requiring the designers to provide for a capacity in excess of actual requirements. If the price is made low, the engineer will design a main large enough to provide enough water to give Farmers the full rate allowance of 2s. per thousand gallons, and under that system the Government would have to increase the rate. The earlier guaranteed extensions are exceptions to the system stated. In the cases of the first extensions laid down, the price is 2s. 6d. In 1909 a price varying with each new extension was adopted as in the case of the comprehensive scheme but dealing independently with each extension. In 1912 rating was introduced and a uniform average price adopted as already shown. With regard to your question 6, "Profit and Loss account in relation to the supply of water to settlers," I have had that worked out only in regard to the agricultural extensions. The statement which I have, shows that for seven years the combined result of operations from agricultural extensions was a loss of £5,638,