Wheat (1) - Part 2

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take the mills over and run them so that the profit will go to the whole of the farming community.

2469. Why should there be any consideration shown to the obsolete plants at some of the small mills that you speak of?—None, except that all have a right to live. These men have embarked a certain amount of capital, and I am not in favour of killing any enterprise or industry in the country. We are calling out now for further industries. It is, however, an economic waste to run a mill which is not able to compete with the best mill. These mills are here, and the plant has not been scrapped, and in the circumstances all the mills should be taken as a whole.

2470. You would be in favour of the Scheme losing a certain amount in order to keep these mills employed?—If the Scheme had fix or six mills it would be able to distribute the whole of the loss or profit over the lot.

2471. What do you think the incoming crop will be bought for— as wheat, flour, or in bulk?— The mills are working as hard as they can. They are making flour, which to my mind is a mistake. But it depends on how soon they can eat up the wheat when they make a start on the incoming crop. They have enough wheat now to keep them going for a couple of years. You must remember that the flour they are now milling for the Imperial order should be subject to inspection. Possibly it is. That flour, if kept a considerable time, will get floss in it and will deteriorate in value. It requires to be stored under the best conditions, and I know that is not being done. These are matters that should be dealt with by a fully competent board.

2472. If in future our buyers require wheat instead of flour then this gristing agreement will be altered in the scheme of operations?—Yes. The agreement at present should not go beyond the requirements of the British Government for flour, but in regard to the other matter it should be seen that the British Government accepts the responsibility for that flour as soon as it is milled. In 12 months time the British Government may say that it is full of floss and that it will have to be re-treated. It will be a poor look-out for the farmer if that has to be done, but if it is the British Government's funeral then let them have it. You will remember that when Mr. Hughes made the sale of three million tons to the British Government in December, 1916, he said that it was to be moved by the end of June, 1917, and he actually gave the monthly shipments which were to take place. As we know, through submarining, few boats came here to take the wheat away, and at the end of June, 1917, only 10 to 20 per cent. of the wheat had been shipped. As a farmer, I assumed that the British Government were responsible for the condition of that wheat after the end of June, 1917, but when we started to make inquiries we found that we had to carry that wheat until December, 1917, before the British Government took the responsibility. Now the British Government have been taking it over and agreeing to the dockage on account of weevil and waste. If it all becomes waste, so far as the farmers are concerned, that is the finish of it. What we are concerned about is the wheat that is not being sold. We are going on gristing flour 24 hours a day, and what I would like to know is whose is the responsibility for that flour after it has been gristed. I am afraid it will be like the wheat, that there is no responsibility until it is shipped.

2473. In connection with the Farmers and Settlers' Association, I presume you have articles of association?—We have a constitution.

2474. Could this Commission have a copy of it?—I can give you a copy now.

2475. By Hon. J. F. ALLEN: With regard to the independent audit which has been discussed so much, is it part of an auditor's duty to criticise the policy of the management of any business or only to verify the accuracy of its accounts and the efficiency of the bookkeeping method?—It is not part of the auditor's business to criticise the method of running a business. But when you say "the correctness of its accounts" I would like to quote the Wheat Scheme as an example for the sake of argument. The duty of the auditor would be not only to see that the wheat certificates which had been issued had been properly accounted for and all cash received for sales was also properly accounted for, but he would also have to see that all contracts which were made with regard to agency and milling had been properly carried out. With regard to the agency agreements, he would see that all provisions in the agreement with regard to the charging for re-bagging and the re-conditioning of wheat where it was found to be the fault of the agent, debits were raised for them and that they were properly discharged. With regard to the milling, he would see each week that the wheat was requisitioned by the mill and paid for. In that particular I remember that Mr. Barton, in his second report on the New South Wales scheme, found that there were 60 mills there and that one man was consistently requisitioning less wheat than he milled each week. The result was that he was running on the Wheat Board's money. Mr. Barton pointed out in his report that this man was not carrying out his duty, and I am quite sure that if you got Mr. Toppin here, or whoever conducted the audit for him, you would find that there was no inquiry into matters such as those. If you were auditing accounts you would see that the proper freights ruling were charged, that those freights were not exorbitant, and that the Commonwealth steamers were not being paid, as they are, the highest rates of freight for wheat shipped. It is a peculiar thing here that we have the Commonwealth Government buying two million pounds' worth of steamers and then getting the highest rate of freight paid for carrying wheat. You would also inquire into the methods of financing and generally into matters that appeared to you to be of interest to the farmers in connection with the management of their affairs. A man would never ask a Minister why he did a certain thing, but the Minister having done it, it is part of the auditor's duty to see that the agreement is carried out.

2476. You are dealing with this Scheme; is that system adopted in connection with any ordinary business?—The audit is exactly what you may agree upon. As to the work, it may be a partial or a whole audit. You may say to the auditor, "I want you to point out loose methods in my business?"

2477. Then you would be a business adviser?— in connection with a public company, you have the right to point out anything which materially affects the affairs of the company. It is no use for a man to say, "I did not think that was part of my duty." If it comes under your notice, it is your duty to point it out.

2478. There is no clear definition?—Common sense is the only clear definition you can give.

2479. If the Auditor General says he is exercising common sense what would you say?—In all audits I have seen of Government accounts, common sense has never been displayed. The Government audits are run on the rule of thumb.

2480. By Mr. HARRISON: With regard to flour milling in this State, you said that there were certain obligations the millers had to the Pool for non-payments of money which cannot be adjusted. Is that so?—There is no reason why, so far as I know, the agreement with the millers as regards payment cannot be carried out. It is because of the millers' procrastination and passive resistance that they have not been carried out.

2481. In all mills, after running for a considerable period, they have a certain amount of time annually for overhauling their plants, and that is taken advantage of between the seasons, before the incoming wheat arrives. In Western Australia that would be in dry weather?—Yes.

2482. Would it not be a good thing for the Scheme, under those conditions, that advantage should be taken of that opportunity to clean up the mills and to finalise with regard to all Scheme matters?—It is impossible for this reason. When you run a mill, you have your plant in one building and the storage in another. You close your mill down for overhaul and repairs; you run out all the wheat that is in your machines; and you can tell, so far as the mill itself is concerned, what wheat is there. But when you go into the store, unless the store is clear, having no wheat or flour in it, it then becomes a question of stock-taking as to what flour or what wheat is there. If you went into any of the mills at the present time, and stopped them, and ran out all the stuff that was in their machines, you would then be in a position where you could not possibly take stock