STATE LENDING.

Dominion, Volume 6, Issue 1815, 30 July 1913, Page 7

STATE LENDING.

TWO IMPORTANT BILLS. LOCAL BODIES' LOANS AND ADVANCES. Two Bills brought down by Governor's Message in tlio House of Representatives yesterday—tho Local Bodies' Loans Bill and the State Advances Bill—consolidate and amend tho legal enactments governing tlio operations ot the Stato Lending Department. Both measures were brielly explained by the Minister for Finance (tho lion. Jns. Allen), as reported in another' column. Tho Local Bodies' Loans Act embodies a number of amendments, tho most im-. portantuf which makes provision whereby a local authority may raise a special loan outside of New Zealand with the guarantee of the State, when tho consent of tho ratepayers has been obtained. In such tt case, if the local authority defaults, tho loan will bo paid out of tho Consolidated Fund, Such guaranteed loans must not exceed in tho aggresfato ,£500,000 a year. No such guarantee is to be given by tho State unless tho local authority has mado duo provision for the loan. Interest is not to exceed 5 per cent. Tho term of the loan is to bo 33 years, and provision is made for a sinking fund of 1J per cent., which is to bo paid into the hands of tho Public Trustee. If a local' body defaults under .these provisions, a recoiver will 1» put in by the State, and he will havo all tho powers conferred by law on a mortgagee, except that ho cannot toll without an order of a Judge of tho Supremo Court, and that 'no public reservo may bo sold. The receiver may also amend tho special rate upon an order of n Judgo of tho Supremo Court. It will be the receiver's duly to apply tho moneys ho receives in the payment of tho princi-, pal and interest of the loan. Tho machinory for raising loans is simplified. An authority may raise ono loan to cover moro than ono purpose or a special loan for a defined part of a district. Whereon object concerns several districts, the authorities concerned may unite in raising a joint special loan, such authorities agreeing upon the apportionment of the loan, tho portions of tho contributing ratos to be paid by each, and also upon the control of the work. When the original loan is insufficient to completo tho wock, the authority may borrow, without' tho ratepayers' authority, a further sum amounting to one-tenth of the original sum. In relation to security for loans, it is provided that "very special rato shall be calculated to yield, if necessary, .£lO per cent. more, than the annual or other charges in respect of tho loan. ' Evory special rate is to bo made over an area within, continuous boundaries, and all rateable property within that area shall be liable. Special ratos shall bo reserved solely to their Bpecial loan a3 seourity. In mining districts local authorities to construct public works may impose special rating oh mining privileges, the rateablo value being a sum whioh, invested at six per cent., would produco a yearly amount equal to the rent paid to the Crown, and as collateral security tho goldfiekls revenue may bs' pledged. It is provided in respect of loans by the Advances Office that. the superintendent shall exercise a 'practical' limit of to any one authority in three years. Loans rendered necessary by flood, tempest, or accident shall have priority over other loans. In case of insufficient capital available, preference shall bo extended . to outlying districts' applications for loads and bridges. ' 1 State Advances Bill, One of the most important features of tho State Advances Bill is tliat which alters tho constitution of tho Advances Board. At present tho board is a mixed body, consisting partly of officials and paTtly of outsido members, and including the Minister for Finance. Its members are: Tho Hon.vJes'.^Allen,. Mr."Cu -F; C. Campbell (Superintendent -ofr>Advances), the Valuer-General (ilr.'F. W. Flanagan), • tho Public Trustee ' (Dr.' Fitchett), and Messrs. J. K. Warburton and Henry, kember. It is now proposed that tlio board shall consist'of tho Superintendent; the TJnder-Scerstary for Crown Lands, the Valuer-General, and two other officers in' tho Public Service. The maximum amounts that may bo raised in any ono ye(ir for' tho business of the several branches of the Department ar3 as under: — Advances to Settler's, <£1,500,000. Advances to Workers, .£700,000. Advances to . . Local . Authorities, ,£1,000,000. If tho whole amount for any branch is not raised in. ono year, the unraised balanco niay.be added to the amount that can be raised the next year. The rate of interest on tho sums so raised is limited to 5 per cent. Out of tlio Advances Account will be paid the cost of raising tho money, and interest and sinking funds. Provision is made- for the establishment of a Reserve Fund, of not less than ,£50,000 in connection with the Advances to Settlers- branch. The reserve fund- in ' connection with tho Advances to Workers ' branch is to consist of the whole of tho net profits arising from that branch. Both of tliose funds arc to ba invested ' and reinvested in advances. The loans so raised are to bo a part of tho Public Debt of New Zealand and come under the provisions of tho Public. Debt Extinction Act. The provision in tho existing Act tint Kinking funds tiro to bo paid to the Pub-, lie Trustee is repealed and they are to bo paid into a special Sinking Fund Account. Tho interest on the money at present in the hands of tho Public Trustee is to bo pni'd'into that account on March 31 of each year; and tho Hill_in addition provides for a general sinking fund of 1 per cent oil the capital moneys raised. . . In cases where the money is raised by tho Government at a rate exceeding- 4t per cent, the Advances Office may charge the borrower- \ per cent extra. For first-class securities the term of the loan will bo 36-i years,- and for a second-class security-30 years, and for a third-class security 120 years. Rebate of interest is.to bo granted when money is paid, in advance, and provision is lurnle for the readjustment of loans when part repaid, and for the making of further advances as tho loan becomes partially paid off. Lands held on deferred payment may be mortgaged under tlio Act. lii regard to advances to workers, it is provided thot no advance exceeding .■£4 Bo shall ba granted to any ono borrower, and the limit of borrowing is to be three-fourths of tho value of tho security in respect to either a freehold or leasehold interest. Application for loan 1) not exceeding .E3OO will be given priority, and progress payments may bo , arranged for.