Drainage Board Told To Limit Commitments

Press, Volume C, Issue 29504, 4 May 1961, Page 16

Drainage Board Told To Limit Commitments

(From Our Own Reporter)

WELLINGTON, May 3. The Government will do its best to assist the Christchurch Drainage Board out of its financial difficulties. In the meantime the board has been advised by the Minister of Finance (Mr Lake) to delay adding to its present commitments.

The board’s application for a loan of £150,000 from the National Provident Fund will be considered by the fund’s investment committee later this month, and by the Local Government Loans Board at its June meeting. “I am sure that the committee will do all it can to assist you within the limits of the finance available to it and the demands made upon that finance for other purposes,” said Mr Lake in a letter to the secretary of the board (Mr T. A. Tucker). “In the meantime, no doubt you will make every effort to obtain as much finance as possible locally, and I wish you every success.”

Mr Lake said he had looked more closely into the matters raised in Mr Tucker’s letter of April 19, and its accompanying statement by the chairman <Mr F. R. Price). "After studying all the circumstances I feel that while it is much regretted, the only course available to your board is to defer temporarily adding to its existing commitments.” said Mr Lake. “It does not seem likely that, in the present economic conditions, local authorities as a whole will be able to raise sufficient finance to enable them to proceed at the same rate as during the last two years. “I doubt whether the re-

instatement of higher under writing fees and placement fees would do much to make greater amounts available. More probably the result would be an increase in costs greatly affecting the total amount raised.” Earlier, Mr Lake advised Mr Tucker that though the National Provident Fund had only a limited amount of finance available for local body investment, and up to the present had endeavoured in the main, to satisfy the loan requirements of the smaller local authorities which had not the standing to go on the market themselves, it had, on several occasions, agreed to give underwriting support up to a fixed percentage on ordinary public issues where an underwriting agreement could not otherwise be completed.

“In the event of your board being unable to arrange underwriting support for future issues,” Mr Lake said then, “I am sure the National Provident Fund would be prepared to give every consideration possible to subunderwriting up to a fixed percentage, having regard to the money available at the time. If the board is forced tp go on the market without underwriting support, the investment committee would still be prepared to give similar consideration to the question of taking up the maximum amount possible of the unsubscribed portion of each public issue.”