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Hokitika Guardian, 29 July 1931, Page 4

The Prime Minister told a local body deputation in Wellington recently that the finance ot the local authorities was one of the most serious aspects of the present day difficulties. This was due to the volume of local body borrowing' in:'the late past,■■ the Habilility of rates incurred thereby, and the inability of the ratepayers to pay their rates Juo to the fall in prices, These remarks were made to a deputation sent by the Executive of tire New Zealand Counties Associatj >n which approached the Government m respect to the law affecting rates in eases where tenants walked off rated Crown areas, and the Crown was not liable for the indebtedness which had been incurred by the local body in providing improved roading access to the holdings. This is an issue which has developed into a very large question in the North Island-particularly where borrowing in recent years was rife. The Prime Minister had to admit to the deputation that at the present time there were local bodies which stated openly that the only thing they coiuld do with regard to their indebtedness in the matter of payment of interest and sinking fund, was to default. The position is complicated by the fact that the money was borrowed on the security of the land from the State Advances Department from funds borrowed by the Government, There 1$ a difference in this way between State loans and private loans, in that the former has not the direct personal interest the latter has, but if default is made with the State loans* the loss is a community one. The best that the State can do is to nurse such securities, and assist for the time being by not pressing for payment, and await the return of better times. If there is much State money in doubt in this way, it can he well understood that local body borrowing is not fire gilt edged security it once was supposed to be. The State would have a difficulty in levying on its securities in the present plight of dear farm lands, and that means marking time and waiting Micawber like for something favourable to turn up. Those districts are the most fortunate which did not borrow heavily Ar not at all in the socalled “better times” which have left this legacy of serious debt for the country as a. whole to shoulder.