HARBOUR FINANCE.

Dominion, Volume 4, Issue 1106, 20 April 1911, Page 5

HARBOUR FINANCE.

A SPECIAL FUND. TO PROVIDE FOR LEAN YEARS. INNOVATION APPROVED. A long discussion took place at thi meeting of tho Harbour Board last evening on the following motion, brought down by the chairman (Mr. H. Fletcher): (1.) That a special fund bo established in connection with the board's finances. (2.) That tho sum of .£3IOB, being onehalf of the surplus shown in the profit and loss statement for the year ended September 30, 1910, plus a sum equivalent tii six months' interest on tho above amount, be set aside as a nucleus of such special fund to provido for tho contingencies mentioned in Section 172, Sub-Section 1 of the Harbours Act, 1908. (3.) That such moneys .shall bo invested in the name of tho board in ench securities as the board shall from time to. time approve, (4.) That when a surplus occurs in any year not lees than 50 per cent, of sucu surplus shall bo placed to the credit Of' tho special fund. Mr. Fletcher said his idea in proposing tho establishment of this fund, was to prevent a recurrence of tho experience, undergone by the Board twelve monthe previously. It ivould be a very good , thing, when a littlo money remained in , hand nt tho end of the year to build w> , a fund so that in a loan year the board i would not have to tinker with tho tariff as in the previous year. The board this year had a surplus of .CGOOO, and tho motion proposed to set aside .C3OOO of this amount as a special fund. Thcro was no provision in the Harbour;. Act for a reserve fund, but thcro was provision for a special fund. An advantage arising' from the establishment of the fund would bo that amount!! srt aside could be invested on the same lines as sinking funds, locked up as in reserve fund, the money would brinpr in only about 3! per cent. As a special .fund it would brim? in 4}. per cent., and possibly 5 per cent. The purpose, of tho fund, Mr. Fletcher conwas to obyiato the necessity of increasing charges in lean years. ■ "A Sanguine View." Mr. Dauiell objected to tho motion. Ihe board was now setting asido some £19,000 a year in sinking funds. The board had an excess of assets over liabililies of over 1100,000, and the accrued sinking funds totalled .£116,000. Tho speaker admired the foresight with which the afiairs of the board had been conducted in the past, but the .sinking funds wore accruing now in. so many directions'that in about twenty-five years the whole ot the harbour works would be free, and. the successors of tho board would have nothing to pay for. The chairman: "I am afraid that is rather a sanguine view." ■ ' Mr. Daniclh "It may; take 25 or 30 years;

Tho chairman: "That is the present works."

Proceeding, Mr. Daniell said that in the new by-laws such articles as wool' would be so penalised Mr. FJolcher: "There are quite a num. ii "I ~c olic« ssions which you havo overlooked.

•Mr. Daniell said ho had taken account or the concessions, but the rates on woolwere raised. The proposal would mtar. that saving would go on ut an unnecessary rate. Possibly the possession of the surplus fund proposed might at some future time bo embarrassing. As had occurred in the past a "mass meeting" of live waterside workers might set up V deputation of three to urge their circumstances very strongly on tho board. I sympathetic board, possessed of a special"" innd. might under these circumstances.ba unwisely hboral. The proposal was iu .tact to set up a third, sinking fund, although the- board was also contemplatinjr an increase of charges. ■■.'Mr. Fletcher: "That : is not SO." It ■ was not fair, the chairman added, to make a sweeping statement of this kind ', because one or two items had been're- i vised. I

A Prudent Suggestion, ■TM«. Fletcher: "It is'one of tho most ' prudc-nt suggestion that ever came before . tho board. ' Mr.' M'Ewan thought it unwiso to raise a question of policy at this, the last meeting of the board. The proposal should bo left over for tho new board. Tho speaker would like to know how the sue- ' cesrors of the present board could be tied down, and to observe tho condition " n P° ? «l in clause four of tho motion that fifty per cent, of any annual surplus should be placed to the credit of the . special fund. • ■" ■• Mr. Fletcher: "It would be quito open." Mr. MEwan: "It would be quite ope-ii to them to do what they liked with their surplus. Tho proposal, should bo postponed, nnd made simultaneously with this matter, thnt of re-valuing the (xmrd'spro-. perty should be considered. ' : Postponement Urged. Mr: Cohen thought that the spirit of tho proposal was commendable. Ho was inclined, however, to agree with Mr. M'Ewan that the proposal should be post, poned, though not for tho reasons stated by that gentleman. So long as tho board existed it was bound to exercise and administer its functions. If this were not ' so, it would become a question for how many months before it retired the board . should cease to act at all. In the speaker's opinion this proposal embraced the whole question of the accountancy of tho board. Mr. Daniell had deliberately stated thnt in the board's accounts a, sum of about .£420,000 had been 6et aside m twenty-seven years for , depreciation. This was not so. : .' : '. ' '■■ .•' Mr. Daniell: "Partly for renewals." ' ■Mr. Cohon said this diminished the force of the statement. ' ■ ■ ~ . -■.

After some further remarks, Mr. Cohen* ■ suggested that tho whole question of depreciation, sinking funds, end' accountancy should be gone into with (lie purpose of seeing whether the end desired by the chairman could no , , bo attained in many other ways. It v;!i<. a sound principle, Mr. Cohen contended, lhat (he oontrhntors to a body like the Harbour Board should not be taxed in ■ arty giTntoramount than would cover its reasonable expenditure. They had no right to uiakn thousands of pounds profit. Ho did not suggest that the board bad done so, but a feature of the present liositio.n was that, continuing the present policy, the cost of every depreciable asset of the board, including even stone walls, would be saved in twenty years. Was this necessary? The existing sinking funds were goine to extinguish every debt of tho board in about thirty years. It seemed to the speaker that, under tho circumstances, the board should.xciuco its tariff... charges-as quickly as possible. A Steadying Influence, Mr. Tewelcy supported the motion. The establishment of tho proposed fund would steady tho charges of the board. If, at ' tho end of a few years it was found that tho fund was too large,-it could eaMly be reduced. Mr. Hildrcth also supported the motion, on grounds similar to tlioso expressed by Mr. Tewley. Mr. Boltou contended that it was distinctly nioro prudent to lock up eoine money, as proposed, in a special fund than to pass it forward as part of the general surplus. A board having a , special fund would bo less likely to give way injudiciously to appeals of tho nature mentioned by Mr. Daniell than a body having money immediately available in tho shapo of ordinary surplus. Tho establishment of tho fund would tend to promote stable financo and stable charges. Mr. Cohen stated that, if he could not gain his end and have a comprehensive inquiry into the accountancy method? of-the board set on foot, he would sup port,tho motion. ; Tho Chairman's Reply, Iu tho course of a brief reply, Mr, Fletcher said ho did not agree with Mr. Cohen lhat tho annual sinking fund appropriation of 3} per cent, was too large. 110 agreed with tho secretary lhat the board should try. to get the amount raised as soon as possible to five per cent. Tho speaker agreed that it would bo n, criminal policy on the part of a local authority to make largo profits, but it could not be claimed, considering tho magnitude of the board's operations, that ,£6OOO was too large a proht to make in a year's working. The proposed fund was a contingent fund intended to meet the necessities of a. lean year. The speaker was sorry it had not met with general, approbation. A vote being taken, the motion was carried on ihc voices.