The Guardian And Evening Star, with which is incorporated the West Coast Times SATURDAY, OCTOBER 15, 1932. SINKING FUNDS.

Hokitika Guardian, 15 October 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times SATURDAY, OCTOBER 15, 1932. SINKING FUNDS.

A Bill introduced into the l House of Representatives of interest to local bodies, the Loc'al Authorities Sinking Funds Bill has been read a first time. According to the official explanation of the BiU, the Public Trustee as Sinking Fund Commissioner for a large number of local body loans has been giving local bodies the benefit of the Common Fund rate of interest, which up to recently was 5$ per cent. When tills rate was reduced to 4 per cent, s-ome local bodies wore anxious to withdraw their funds from the Public Trustee. As lie receives instalments of sinking, funds the Public Trustee has been accustomed to allow interest from the time the sums are paid to him, thus they begin to earn interest immediately, whereas if sinking fond commissioners invested' the sums themselvfb they might have to wait for a suitable investment, especially if the sinking fund were a small one. The placing of sinking funds in the Com moil Fund, it is stated, has given local bodies the benefit of a regular rate of interest irrespective of the securities in which the Common Film moneys are invested. At the present time the losses on mortgage investments are met out bf the Common Fund, hut local bodies do not lose the pvinoioal. They have suffer oil' only reduction in the rate o' interest, whereas i| is claimed tlm* if their own sinking fund commission ers had invested in mortgaens their lo;ic,might li'-vc Ir’en lmavier. According to the usual procedure the Public Tin.' 1 ■ ' arranges for sinking funds to be n leased at the date of maturtiy of the loans. The actmn of local bodies in asking for the release

of sinking funds at the present time means, therefore, that the Public Trustee has to realise on his investments in order to meet their demands. At the present time', however, on account of the legislation of the Mortgagors Relief and National Expenditure Adjustment Acts, he is unable to realise on thvse investments. The Bill lias accordingly been designed to enable him to refuse to pay out sinking funds until the expiry of this relief legislation on April Ist., 19-15. Two principal questions are dealt ,wifh in the Bill- Clause 3 imposes a temporary restriction on the rights of local bodies to -withdraw Kinking funds from the control of tire Public Trustee. Clause 4 says that where any local hotly has appointed or appoints the Public Trustee as commissioner of anv sinking fund, and the ‘appointment has been expressed by duel or resolution to be irrevocable or to be revocable only on certain specified conditions, the appointment shall bo irrevocable, except in accordance with any specific conditions provided for. Clause 5 relates to the changing of securities. At the present time « local body can apply for an Order-in-Counc'i to have its securities taken out of the Common Fund and separately invested. The clause provides that no such Order-in-Council shall bo granted at any time before April Ist., 1935.