LOANS FOR LOCAL BODIES

Dominion, Volume 32, Issue 151, 22 March 1939, Page 10

LOANS FOR LOCAL BODIES

It becomes necessary once again to draw attention to the delays and inconvenience caused to local bodies through their inability to raise loan moneys within the interest-rate limit of 31 per cent, prescribed by the Government. The Palmerston North Hospital Board needs £82,000 for building purposes in the near future. As private investors appear to have no difficulty in finding more remunerative rates elsewhere, they have turned down the hospital board s per cent, proposition. Nor is the Government, through the State Advances Corporation, in a position at present to find the money. The only way out apparently was, as a temporary expediency, to hypothecate the board’s debentures at the bank at 4| per cent. In the same issue of The Dominion as the above appeared was reported the experience of the Auckland Power Board in its attempt to raise £290.000 by the sale of debentures at 3| per eent. Private investors were not interested. The Auckland Transport Board made a similar attempt and managed to raise £BOOO of a total requirement of £250,000. Last month the New Plymouth Harbour Board, requiring £325,000, obtained permission to borrow in Australia at 4J per cent, lhe Gisborne Borough Council is looking round vainly for accommodation to meet a London loan of £160,000 falling due, and is considering the question of following the example of the New Plymouth Harbour Board. The servicing of overseas loans means extra expense, which could be saved if it were possible to raise money locally even at the Australian rate. Moreover, it has been pointed out that long-term loans at as low as 4 per cent, could have been negotiated by local bodies in New Zealand but for the Government’s restriction. Rates are now hardening, and the difficulties of local bodies with important undertakings on hand, and obligations to meet, are becoming multiplied over a wide area. What qre they to do? As a member of the Auckland Power Board remarked in connexion with the deadlock facing that body, “it is only fair that the Government should let us have the money or show us a way of getting it.”