LOCAL BODIES' INTEREST.

Press, Volume LXVIII, Issue 20490, 8 March 1932, Page 8

LOCAL BODIES' INTEREST.

THE ECONOMISTS' REPORT. 1 • STATEMENT BY MB W. MACHIN. In the course of a review of the findings of the Committee of Economists given to last night's meeting of the Riccarton Borough Council, Mr W. Machin (the Deputy-Mayor) advocated joint action by local bodies throughout the. Dominion to meet their creditors with a view to a general reduction in the rates of interest. He expressed the opinion that a voluntary reduction would be highly desirable. The Council decided to discuss the whole matter at a fuller meeting. "It is significant that the report of the Committee of Economists makes so marked a reference to the interest payable on loans by local bodies,'' said Mr Machin. "This Council has a total indebtedness of £44,840 in loan money, of which only £8672 is under 5 per cent. There is £2900 at 5 per cent., and the balance, £33,000, is at a rate exceeding 5 per cent. —mostly at 5J per cent. —which is a high rate. Good Security. "The security is first class and I venture to say that there are few mortgagees of single properties who are receiving anything like that to-day. It seems to be necessary that these rates should be reduced. If we eliminate the 4' per cent, loans and take into consideration the 20 per cent, cut in interest suggested, we will save £4OO a year, which is equal to a farthing rate on the borough. It is reasonable to assume that the Dominion will follow the lead of the Economy Commission. We will have to see if our creditors can take a lower rate of interest, and I should like to see it done voluntarily. However, there is a general feeling that it will, have to.be done by law. "There would be a very general response to a request for a lower general rate when it was seen that the security was good, and in view of Dominion conditions generally," said Mr Machin, "all local bodies should put forward a request for a reduction. I should like this Council to take the matter up seriously. We could test the bondholders generally throughout NewZealand, and at the same time we could review our figures for the yeaf's estimates and see if a reduction could be made in the rates. Indeed, we did that last year. Further Economies. "Wo could go into the question of further economies and' a reduction of expenditure so that wo could, in turn, reduce the rates by id to 3-8 d in the £. It may even be- possible to reduce the rates by in the £l, contingent on the reduced rate of interest being accepted. The local bodies will have to take the initiative. The matter may well be considered by the finance committee or the whole Council." Cr. T. M. Ford said that it was only fair that interest on local bodies' loans should be decreased. Mr Machin said that some of the lower rates of interest should not be subject to any cut. '