THE PROPOSED MUNICIPAL LOAN.

Ashburton Guardian, Volume V, Issue 1398, 4 November 1886, Page 3

THE PROPOSED MUNICIPAL LOAN.

The debate in the Borough Council on Monday evening upon the resolulution moved according to notice by Councillor Thomas will have been read with interest by the burgesses, as affording a clear insight into the minds of their municipal representatives on the subject of borrowing generally. It was also not wanting in just a dash of the piquant sauce of civic wit, with a soupsonof sarcasm, as, for example, in the passages between the mover of the resolution and the opponents of the “ horrid borrowing policy,” so vigorously denounced by Councillor Harrison. We think it may be open to question whether, in the interests of the serenity and decorum of the Council’s proceedings, it is expedient for one councillor to speak of another as a “general rioter,” and are willing to assume that the words were used in a Pickwickian sense, and in the utmost good nature, but we entirely concur with Councillor Harrison as to the wisdom of municipal economy in these straitened times, and in his hope that Ashburton will not “ launch into a policy of borrowing. It is, indeed, pleasing to find that on the part of the the whole Council there is a wholesome dread of indebtedness, and no disposition to recklessly discount the future, even under the temptation of being able to obtain money at a low rate of interest, and the ratepayers may rest satisfied that their affairs are in the hands of careful and prudent men. But at the same time we think that the supporters of Councillor Thomas were only acting prudently and wisely in affirming the desirableness j of borrowing a sufficient sum to pay off the present overdraft and other liabilities. Indeed seeing that, as it appeared to the Counei 1 , they could obtain the necessary sum from the Government at 5 per cent, per annum (including sinking fund) and extinguish the debt in 25 years, as against paying per cent, for overdraft, without extinguishing or reducing the debt at all, it would have argued very poor business capacity had the Council decided otherwise than it did in affirming the desirableness of the course advocated by the Mayor and Councillor Thomas. But after all the debate is merely interesting as a debate, and can we think have no practical result whatever. Most certainly the Council cannot borrow the sum proposed, for the simple reason that the Government has no power to lend any such sum, and Councillors Harrison, Reid, and Williamson, who are opposed to all borrowing whatever, can possess their souls in peace, as it seems the Council cannot borrow at all in the way proposed. By turning to the Government Loans to Local Bodies Act, it will be seen that the interpretation clause limits the advances which may be made under that Act to five classes of governing bodies, viz., County Councils, Road Boards, Town Boards, River Boards, and Drainage Boards, the maximum advances possible to the first four of these being specifically stated in Section 13. The only prqvision for advances to municipalities under the Act is a special and specific one relating to a particular class of works undertaken by the smaller boroughs, and will T>e found in Section 25, which is in the following terms :—“ The Council of a borough established under any Act relating to Municipal Corporations, the inhabitants of which at the time of the last census were returned n<? numbering less than four thousand, may apply for and obtain aid for the construction of a wharf under the control of the Council, or of a bridge on a main toad, upon the same terrai and conditions as a local authority, provided that not more than eight hundred pounds shall be lent in any one year to any one borough.” As part of the liabilities of the Borough which it was proposed to liquidate by the loan consists in a proportion of the cost of constructing the Ashburton traffic bridge, it is just possible that so much as would recoup this might be borrowed of the Colonial Treasurer under the section cited, but even then the terms of the clause would have to be somewhat stretched, as it would appear that these were only intended to apply to the cost of new works constructed, or to be constructed, rather, after the passing of the Act, Certain it is that in any case no money could be advanced for any other purpose than a bridge or a wharf, and that even then the maximum limit is So that it is absolutely clear that if the Ashburton Council desires to borrow ■£2500 it will have to go elsewhere than to the Government. Jf that body adopts the Local Bodies Loans Act, as it proposes to do, it can raise a loan in the open market for any sum required to repay any liabilities or overdraft, without the necessity of appealing to the ratepayers for specific authority so to do, and if, as it probably could be, the sum required could be raised at par upon 6 per cent, debentures, the Council would save the burgesses the difference between that rate and the amount now paid for overdraft, which is, we see, per cent. But there would be some expense attendant upon the printing and issue of debentures, which would probably equal the amount of the saving made for one, or, possibly, two years ; and it is, perhaps, therefore hardly worth while to take this course if the Council can see its way to pay off its liabilities out of revenue within, say, two or three years. That, however, is a subject for the careful consideration of the Council. Meantime councillors may rest assured that the matter will have to be gone into de novo, for the resolution agreed to on Monday last can certainly not be carried into effect.