The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, APRIL 7, 1933. LOCAL BODIES LOANS.

Hokitika Guardian, 7 April 1933, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, APRIL 7, 1933. LOCAL BODIES LOANS.

The Government proposals in connection witn the internal loan, convoiicion of local bodies debts are not meeting with the unanimous approval of the heads of local bodies in some of the centres, and there is a definite impression prevailing that only a few wilt avail themselves of the present proposals. Under th© terms of the act local bodies are required to formulate within certain limits their own conversion schemes and submit them fqr approval of the Jaiarts Jloapd, Several of the bodies seem to he waiting for a lead from Wellington, or at least for some more definite indication of their powers for conversion and its likely benefits, The interest reduction which came into force last Saturday, April 1, amounts to 20 per cent, on local body securities, with a minimum rate of 4} per cent. Since the reduction to he achieved by conversion is broadly the same, some authorities do not gee why they should o*O' to the trouble and expense, which this operation would entail. Conversion, however, would enable them to consolidate large portions of their debts and to arrange for these consolidated loans to mature at suitablyspaced intervals and in manageable amounts. This feature will no doubt appeal to 1 some of the larger authorities; but here, again, there are difficulties where there art many small loans that have teen raised over different rating areas and that are, therefore, difficult to consolidate. In the recent national conversion scheme the Government tnok the opportunity to re-arrange the maturity dates of > its own internal debt; and it is expected that this point will be : given full weight by the Loans Hoard when local bodies’ schemes are framed. If local authorities generally do not respond to the scheme, the Government may fee! itself bound to take further action if it is to carry out its interest reduction plan to the fullest extent. Past experience has shown that taxes on interest tend to raise rather than reduce the.level of interest rates; that, indeed, was one of the principal reasons why th© Government decided to convert the internal debt instead of securing relief on itr, debt- services by taxation. Now that it has carried through the national scheme, and established a new standard rate of 4 per cent., it is hardly likely to stand aside while local bodies. adopt the flat interest reduction not merely pending, b\it in preference, to conversion. Having reduced its own rate of 4 per cent, the Government aims to secure a reduction in the local body standard rate to 4\ per cent. It U ered, incidentally, that in view of the wide variation,? in security offered by various local bodies that it will be difficulte for a standard rate of interest to be maintained.