HARBOUR WORKS LOAN

Press, Volume LXXIV, Issue 22515, 24 September 1938, Page 21

HARBOUR WORKS LOAN

BOARD’S DISCUSSION AT TIMARU POSSIBILITY OF SUSPENDING IMPROVEMENT SCHEME [THE PRESS Special Service.] TIMARU, September 23. Because of the refusal of the Treasury Department to make the necessary provision which would allow the Timaru Harbour Board to accept an offer from the State Advances Corporation involving £20,000, there is a possibility of the harbour improvement scheme, involving an expenditure of £242,000, being held up. The matter was discussed at a meeting of the board yesterday, when, in view of the position that had arisen it was decided to carry out the work from month to month. Explaining the position the actingsecretary. Mr G. R. Lee, said that when the sale of debentures became difficult the chairman decided, in view of the statements made by Ministers. of the Crown that the Government would provide local bodies with the necessary money to enable them to continue their works. If they could not raise it from private sources at 3i per cent., they were to visit Wellington and approach the Minister for Finance, the Hon. W. Nash. This he did and he was informed by Mr Nash that the undertaking given by Ministers was not to provide all the money necessary but only ■ that necessary up to December 31, 1938, and at the terms laid down by the Government and not necessarily those at which the particular body was raising its loan. The Minister for Finance could see no reason why £2OOO could not be made available on September 30, and a further £45,000 made available on December 31. Further he could see no reason why the terms offered could not be consistent with the financial plan upon which the present harbour scheme was based on August 26. The member for Timaru, Mr Clyde Carr was communicated with and advised that if a reply to the application made by the Harbour Board to the State Advances' Corporation, in accordance with Mr Nash’s advice was not received immediately the board would have to consider its position. As a result the board received an offer from the. State Advances Corporation of £2OOO at the end of September on terms which had no relation whatsoever to the financial plan and which involved an application being made tc the Treasury Department for an amendment to the Order-in-Council upon which the raising of the loan was based. Briefly put, the acceptance of the offer would involve the adoption of a system of short term finance instead of a system of longterm finance. After considerable examination of the problem it was found thatrif the Treasury Department would agree to varying certain conditions concerning sinking fund payments it would be possible to accept the offer which, in fact, was accepted provisionally. -

After detailing further i negotiations. Mr Lee said that the Treasury held that in spite of a number of arguments the board put up to counter suggestions in the Treasury’s earlier letter there was no possibility of obtaining the necessary varying Order-in -Council, and, further, that at the present juncture there was no indication whatsoever of a possibility of the board being allowed to pay 4J per cent., in spite of the fact that it was quite prepared to do so and its finances were capable of meeting the costs. Later a further telegram was received from the State Advances Corporation offering a loan of £45,000 from November 1 - on terms obviously unacceptable to the board; The terms had no relation whatsoever to the board’s financial plan and were inconsistent with the information given the chairman during his visit to Wellington. Chairman’s Statement The chairman. Mr F. R. Hatman, said that, In the circumstances, he would prefer that work be suspended for a year unless the money was forthcoming; the Treasury Department had since hinted that it might be better to adopt such a course. On October 1 all commitments would have been paid, and the overdraft would be £llOO. No more loan money would come in unless sometning unforeseen occurred or some debentures were sold. - “It seems to me that the statement of the Minister for Finance (the Hon. W. Nash) is not worth a tin of fish,” said Mr A. R. Guild. “In spite of the board’s proposal having been approved and commended by the Local Government Loans Board and put through, the State Advances Department suddenly upsets the arrangements.” Mr W. H. Orbell: Were you not given an assurance by the Government that if we could not get money from a private source the Government would help us? The secretary replied that Mr Orbell was probably referring to a statement

made at Dunedin by the. Hon. P. f/aser an <* by the Prime Ministw(the l on - M - J- Savage) that able 6 would be am P le money availMr Orbell: Then who rules this country?, Mr W. Lindsay said that the reason the money could not be obtained was that it was not there. He had n-ver gone in for anything for which re could not pay,- nor would he do so now. Goodman said that he did not think there was much need for worry. People were at present worned over the international position an d elections in New Zealand and naturally were tightening up. He thought they should close down, but i)ot immediately. The board could carry on for quite a considerable P er ]<>d- It had an overdraft of 14,000. The chairman said the position warranted deep consideration. On the suggestion of Mr Guild it was decided to discuss the position at a special meeting to be held early in November, the work to be watched carefully meanwhile.