12194. The Harvey people were certainly entitled to go away from the meeting with the impression that the rate was 17s. 6d. on the 3,350 acres?—Yes.

12195. The subsequent alteration to 2,657 acres therefore seems more or less unjustifiable?—I do not think there has been any alteration.

12196. The Harvey people say so, and all the language of the files seems to imply that the alteration to 2,657 acres has been passed by the Department?—But the rate has never been altered; that is the main point.

12197. Does not everything go to show that a decided attempt must have been made to reduce the area to 2,657 acres. The Minister told them that and he has to see if he can make it up; his officers tell him there is land and it can be made up?—I think the Minister was under a misapprehension at the time he was discussing that.

12198. Does not the language seem to justify the contention of the Harvey people. They hold the idea strongly that the area has been unjustly reduced from 3,350 acres to 2,657 acres?—If it were reduced their rate would be increased proportionately; the rate has not been increased. I can let you have the file on the matter and you will see exactly how far it was a question of an attempt to increase the rate and how far it was a misapprehension. I am at a disadvantage in regard to the rating matters as Mr. Trethowan dealt with them. I can only give you my idea of the matter. My memory of what occurred at the conference is that the Minister stated that after all he had only 2,265 acres off which to collect money, that they must remember that, that he had to bear the rest himself, that he could not take the 3,350 acres as being all the land on which he could collect revenue, and that he was making a distinct concession to them in simply keeping the rate as it was. I think that is what was finally arrived at.

12190. I can hardly understand that in view of the agreement that the area to be served was 3,350 acres. The estimate was £34,000, and it is admitted that £2,520, the saving between the cost of the pipes and the substituted works, was absorbed in general expenditure, and £2,800, the cost of lining certain channels, was absorbed in certain expenditure. That is so?—Yes.

12200. That reduces your estimate to £28,680?—Yes.

12201. The scheme cost £47,193?—Subject to those points which I mentioned.

12202. It has been definitely agreed upon between the Minister and the Harvey people that £9,693 shall be formally written off the scheme, and the scheme nationalised, and only £34,000 be charged against the Harvey people?—Yes. That was agreed to by Mr. Johnson in the first place. It was rather an unusual arangement and was not provided for in the Act. It was an experimental scheme. It was a concession to say that no matter what happened £34,000 was all that the scheme was to carry. That was done at my instigation because it was a new scheme and because it required sympathetic handling.

12203. The net estimate was £28,680, and the net expenditure, after allowance for No. 2 transfers, £43,693. The difference between the estimates and the expenditure would, therefore be £15,013, without taking into account the matter of the farm, which might be £1,000?—Yes.

12204. If the Harvey people had been in an ordinary position and under the Act the Government had said to them that they proposed to put down a scheme for £34,000, they would have been obliged to stand the extra cost?—Yes.

12205. It would not be encouraging for future irrigation schemes if it was known that in the case of the Harvey scheme the actual cost was 50 per cent. over the estimates?—It would not have been so in normal times. The estimate was prepared before the war and the scheme was pushed on and comepleted despite the advent of the war. That, together with several other happenings, increased the cost. The work was commenced, stopped, and re-started twice on account of the failure of the Bill to pass. The work then had to be carried out under unfavourable weather conditions. In that amount there is the overhead charge, which really should have been added to the engineering cost at the time the scheme was put up to these people.

12206. It might well be expected that the overhead charge would be included in an estimate of that sort?—It has not always been so in the past. Several schemes have been put up by the Government which only carried the engineering cost. Any big schemes carry the overhead charge.

12207. Farmers of this description would not understand that the estimate was subject to a provision of that kind. They would take the figures of the Government as being reliable, and take the word of the Government as being final?—If in any case where there was a guarantee of a fixed cost given they were asked to pay overhead charges which had not been mentioned at the beginning of the scheme they would have a perfect right to object.

12208. Do the Government pay rates on this land ?—No. The land is not rateable under the Act, but the Government are standing out of these rates; that is to say, the Government are not attempting to make the Harvey people pay them.

12209. It is rateable under the agreement?—It is chargeable under the agreement for its share of the cost. The Government are standing that charge.

12210. What are the total water rates collected?—According to the accountant's figures they are £2,265 3s 10d.

12211. On what acreage are these rates based?—On the 3,310-acre basis.

12212. I calculate that on that basis the rates would be £2,896. The amount you mentioned must therefore be calculated on the 2,657 acres?—There would be some exemption. Exemptions are granted under the Act on the advice of the Commission, in cases where land is not suitable for irrigation, or is not capable of being supplied. There was a few cases last year which came before the Commission.

12213. Apparently the agreement overrides the Act?—I do not think so, so far as exemptions are concerned. It was an understanding that the scheme would be carried out under the Act.

12214. The Harvey people had to sign away their body and soul in accepting the agreement?—There is no agreement accepted. These people refrained from opposing the scheme under the Act.

12215. If they had thought the area would have been reduced, or that there was an option on