The following memorandum has been submitted to me by the River Murray Commission asking for advice:

I am directed by the River Murray Commission to submit to you the following question for favour of advice.

Included in the statement of expenditure incurred prior to 31 January 1917 submitted by one of the Contracting State Governments is an amount of £14,959, covering interest on loan.

In the statement of expenditure proposed for the year 1918-19, submitted by the Constructing Authority of the same State, to enable compliance by the Commission with section 34 of the Agreement, is included an amount of £9,000, representing interest.

The River Murray Commission, at its last meeting, considered the question as to whether the Commission would be justified in regarding such claims as covering 'expenditure pursuant to the River Murray Agreement', and it was decided that your advice be sought with a view to assisting the Commission in arriving at a decision in the matter.

In this connection attention is invited to the memorandum of the Solicitor-General, dated 20 March last⁽¹⁾, furnishing an opinion on the claims submitted by the three Contracting State Governments in respect of expenditure incurred prior to 31 January 1917.

I am enclosing herewith, for your information, a copy of the River Murray Act, and Agreement.

The scheme of the financial clauses of the Agreement is as follows:

By clause 32 the cost of carrying out the works provided for in the Agreement is to be borne by the Contracting Governments in the proportions set out in that clause.

By clause 33 the estimated cost of the several works provided for in the Agreement is specified.

By clause 34 the Commission is required in the month of March in each year to prepare and forward to each of the Contracting Governments a detailed estimate of the amount of money required during the 12 months from 1 July next ensuing, setting out details; and the Contracting Governments are to pay the money to the Commission in the prescribed proportions within the 12 months.

In addition, in preparing the first estimate under clause 34 the Commission is to include any amounts of moneys expended or to be expended by any of the Contracting Governments pursuant to the Agreement before the period of "12 months covered by the first estimate.

Provision is also made in the clause for additional expenditure.

The Act commenced on 31 January 1917, and the first period of 12 months for which an estimate was to be prepared was the period from 1 July 1917 to 30 June 1918.

As regards the amount of £14,959, in relation to which advice is asked, I understand that the contention of the Contracting Government which makes the claim is that it is money expended or to be expended by the Government pursuant to the Agreement before the beginning of the first period of 12 months above referred to. In my opinion money expended or to be expended by a Government pursuant to the Agreement means money expended or to be expended upon some of the works provided for in the Agreement, and does not include the interest paid upon money borrowed and expended upon such works.

As regards the amount of £9000 in relation to which advice is asked, I would point out that the procedure provided by clause 34 is for the Commission to prepare and forward each year to each Contracting Government a detailed estimate of the amount of money required during the ensuing 12 months. I understand that in order that it may prepare such estimate the Commission is supplied by each Contracting Government with an estimate of the probable expenditure on behalf of that Government. The Commission is not legally bound to adopt the estimate of any Contracting Government. Its duty, according to clause 34, is to prepare estimates and call upon each of the various Contracting Governments to pay to the Commission its proportion of the estimate made by the Commission. Under these circumstances it appears to me that the question upon which advice is asked-namely, whether interest on money borrowed by a State Government can be regarded as being 'expenditure pursuant to the Agreement'-can hardly arise under the procedure laid down in the Agreement. The Commission has power to call upon each Contracting Government to pay its share of the estimated expenditure, and if it exercises that power the payment of such a sum of money as represents the amount of the share of the Contracting Government less the interest paid or payable on that amount would not in my opinion be a compliance by the Contracting Government with the requirement of the Commission. In other words, I do not think that in reckoning the amount due to the Commission as the share of a

Contracting Government interest on any moneys borrowed by the Contracting Government for the purpose of making the payment can legally be included.

[Vol. 16, p. 65]

(1)Openion [Vol. 15,p.411] not published.