LOCAL BODY LOANS.

Dominion, Volume 6, Issue 1589, 5 November 1912, Page 3

LOCAL BODY LOANS.

PROPOSED ALTERATIONS, PREFERENCE TOR OUTLYING DISTRICTS. Important amendments in the State Gunraii teed Advances Act, 1909, are proposed in a Bill introduced in the House o£ Representatives yestorday. It embodies the Budget proposals regarding financial assistance to needy local authorities in. backblocks districts, nnd gives effect to the policy enunciated by the Minister for Finance. Tho existing law provides that the interest to be paid by local authorities on loans from, tho State Guaranteed Advances system is to be at the same rate as that at ivhich the money was raised, and that the borrowing body is to pay a commission not exceeding one-half per cent.- of the loan to cover expenses of administration. The Bill now proposes the repeal of the provision for commission and the substitution of a new provision that the rate of interest shall be one-eighth per cent, more than the rate at which the money was raised, and in calculating the rate all fees, commissions; discounts, and other charges connected' with the raising of the loan are to' bo-allowed ■ for. These • provisions are to apply to all loans or any part of loans paid to a local authority after the date of the passing of the new , law, whether the application was finally granted before or after that date. important section authorises the payment of a higher rate of interest on loan moneys than originally contemplated without obtaining the further .consent of the ratepayers. The authority is to. pass a .'resolution at a special meetmg f mating a special rate sufficient to cover tho increased payments. It is also proposed that no local authority shall have right of action against the superintendent of the Advances Department for ■ ° n k' s part to advance, moneys atthe rate of interest at which the ap--plication for the moneys was finally granted by the Advances Board. 'Surplus, moneys remaining after the completion of any public work for which a loan is granted are to be repaid to the Superintendent.

Provision* is made for a local authority to repay a loan in whole or in part at any time.

Ihe 1909 Act requires that the purpose of any advance to a local authority shall be lawful and 'reasonable." The Bill now' proposes that no loans should be advanced except for' the construction of roads, bridges, water supply works, drainago'works, or sanitary works. This section is not to restrict the power of the board to grant any loan application wbich has been provisionally, approved 'Wore the passing of the new Act. If the moneys available for advances to local authorities are insufficient to satisfy all. the applications,, preference is to be given to local authorities applying for loans for the purpose of constructing roads and bridges in outlying districts. ' "The board shall not, after the passingof this Act, grant to any local authority," another clause reads,, "any loan which together with all other loans granted by tho board to that, local authority within the preceding three years, exceeds i860,000." ; ■

Special, provisions are made for loans for works in outlying districts. During each of the ten years after the passing of .the Act a sum not exceding <£250,000 is to'.be-set aside for advances, to local authorities for the constructing'of roads i'and bridges in outlying districts, and'for ■metalling such roads ; for. the first time for the assistance of bodies obtaining loans under this section, contributions are to bo made from the Consolidated Fund towards the payment of interest and sinking fund on each loan.. During each of ,the . first ten years of the term of the :loan.the State contribution will be at the rate of one per cent, of the'amount of the loan, and during each of the next years, one-half ,per ctat. ; of the amount of the loan.