INTEREST DURING CONSTRUCTION

Hokitika Guardian, 16 August 1929, Page 1

INTEREST DURING CONSTRUCTION

PUBLIC WORKS

SOUND PRINCIPLE FOLLOWED

WELLINGTON, August 14.

As a result of the criticisms of the Auditor-General in regard to the system of relieving the capital account of public works from interest charges during the construction period.' Mr Black (Motueka) requested the Prime Minister to arrange for the PublicAccounts Committee to investigate the accounts of all hydro-electric works constructed since April 1, 1919. out of loan moneys in the PublicWorks Fund general purposes account so that the true capital cost of such undertakings might be determined. , “There is no accountancy principle which prevents payment of interest on construction out of revenue,I’, 1 ’, replied Sir Joseph Ward, “and where ciroumstances permit it is not unusual even to provide capital out of 1 revenue, as has been done in the case of many works constructed out of the Public Works Fund. To pay interest, in all cases during the construction period out of loan moneys would depreciate the Dominion’s credit on the world’s money market and also would, owing to the varying periods occupied in completing the works, occasioned by changes of policy, result in over--capitalisation. As regards the Stateelectric supply depreciation reserve, provision exists for investing the whole or portion of the. mousy in the schemes. This is not unusual, and proper care is exercised to keep liquid whatever proportion of the fund is necessary for immediate requirements. This practice results in reduced borrowing. As it is a sound finance policy to continue to pay such interest from revenue, it is not considered necessary to rdfer the matter to the Public Accounts Committee.”