The Auditor-General has forwarded for advice the following letter:

I have the honour to request the favour of your opinion with respect to the following:

2. A few years since the Commonwealth acquired the Barrier Wharf, South Australia, from the Barrier Wharf Limited and erected certain mechanical appliances to facilitate the discharge of coal at Port Pirie, the cost of the Wharf and plant being charged to the War Loan Fund. These charges were made during the years 1916-17, 1917-18, 1918-19, and together amounted to £158,117 4s 2d, the entries of the expenditure in the Treasury books being recorded thus-'to be recovered from the State of South Australia'.
3. During the year 1922 under an agreement made between the Prime Minister's Department and the Government of South Australia, the Wharf and plant were disposed of to the Government of South Australia, after allowing for depreciation and certain adjustments, for the sum of £116,703 4s lid, the consideration for such disposal being a deduction of an equal amount from the debit against the Commonwealth from the value of properties transferred from South Australia under the Constitution.
4. On 2 August 1922, the Secretary to the Treasury was asked for advice as to whether it was intended to obtain Parliamentary sanction for the arrangement made with South Australia. To this a reply was received from the Assistant Secretary to the Treasury on 5 September 1922 to the effect that the settlement had been made by 'agreement' as provided in section 85 of the Constitution, and further Parliamentary sanction appeared unnecessary. (Incidentally it is mentioned that the amount of the War Loan devoted to the purchase of the Wharf and erection of plant carries interest estimated to be at the rate of £4 13s 7d to £5 6s lid per cent per annum, while the relief from interest gained by the Commonwealth, through being relieved from its portion of the transferred property liability, is only 3 1/2 per cent. It is also mentioned that the net revenue received from operations during the control of the Wharf by the Commonwealth was approximately £32,850.)
5. The favour of your opinion is required-
   1. As to whether the provisions of section 85 of the Constitution authorise the method of settlement above referred to?
   2. If not, is it not necessary that Parliamentary sanction shall be obtained in order to legalise the arrangement made?
6. The Audit memorandum to the Treasury of 2 August 1922 and the Treasury reply of 5 September 1922 are appended for your information.

The Barrier Wharf was acquired by the Commonwealth under the Lands Acquisition Act 1906-1916 pursuant to a notification published in the Gazette of 7 November 1918.

Section 63 of that Act provides that if any land acquired under the Act is not required for any public purpose the Governor-General may authorise the disposal of it as he thinks fit, and the land may be disposed of accordingly.

No steps appear to have been taken to obtain the authority of the Governor-General for the disposal of the property at Port Pirie.

The agreement made between the Commonwealth and the State of South Australia, which is embodied in correspondence which has passed between the Prime Minister and the Premier of the State provides for the transfer of the Barrier Wharf and certain appliances thereon to the Government of South Australia in consideration of the South Australian Transferred Properties Account being reduced by a sum equal to the value of the Wharf and appliances as fixed by the agreement.

In my opinion that agreement is an agreement within the meaning of section 85 (iii) of the Constitution.

In view, however, of the fact that the Wharf was acquired under the Lands Acquisition Act, I think that the disposal of the property should be authorised by the Governor-General under section 63 of that Act, and the necessary instruments to effect the transfer to the State can then be executed by the Attorney-General under section 57 of that Act.

Further it is, I think, desirable in view of section 61 of the Constitution that the agreement between the Commonwealth and the State should be approved by the Governor-General in Executive Council.

I am, therefore, of opinion that the questions asked in paragraph (5) of the Auditor-General's letter should be answered as follows:

1. Yes;
2. No, provided the action mentioned above is taken.

[Vol. 19, p. 120]