ELIMINATION OF OVERDRAFTS.

Hauraki Plains Gazette, Volume XXXIII, Issue 4403, 19 April 1922, Page 2

ELIMINATION OF OVERDRAFTS.

Of the two methods of eliminating existing overdrafts under the new Local Bodies’ Finance Act, some county councils have chosen to carry loans for a period of 31% years, and others have decided to get rid of the burden within seven years by means of a rate. It cannot be said that any one of the two procedures is the better, as wisdom of action depends on the special circumstances prevailing in each county. Ohinemuri and Thames county councils have chosen the loan system, and the Hauraki Plains the rate. It can. be argued that the loan makes the burden lighter by spreading payment over 31| years, but it is in another sense heavier, inasmuch as the interest charges make the total payment practically double that of. the rate method, whereby the amount of overdraft is reduced substantially every year, and the interest charges “pro rata,” until expiry in the seventh year. Admittedly, there is something to be said for the view that posterity should bear part of the burden., bur against this it can be held thac the existence of old loans on which rates are being paid are a great hindrance to the carrying of new . loan proposals, and therefore a check on progress. In individual cases the rate may bear harshly on Hauraki Plains ratepayers, but when the seven years are up the County as a whole .will be well rid of the burden.'