LOCAL BODIES’ LOANS.

Manawatu Herald, Volume XXXI, Issue 503, 4 November 1909, Page 3

LOCAL BODIES’ LOANS.

GOVERNMENT’S NEW

SCHEME

An Important aspect of the provisions of the State-Guaranteed Advances Bill in regard to the loans to local bodies was discussed on Tuesday at an interview between the Prime Minister and deputation representing a number of local bodies in the Wellington district. Mr T. M. Wilford, M.P., introduced the deputation, and there were also present Messrs W. F, Massey (Leader of the Opposition), F. M. B. Fisher, W. Fraser, F. E. Bautne, W. D. S. Macdonald, and G. J. Anderson, and the Hon. A. R. Guinness, M.P.’s, The deputation comprised : Mr J- G. Harkness (Mayor of Onslow), Mr Bunny (Mayor of Lower Hutt), Mr M'Ewan (Mayor of Petoue), and Mr Kempthorue (Hutt County Council). Mr Wilford said that under the present system a borough or county council could borrow under three terms of repayment of both principal and interest, viz., 26 years at per cent., 32 years at 4 per cent., or 41 years at per cent. The whole liability was extinguished at the end of these terms, the necessary sinking funds being provided by the Government, During the year 1907 8 the Government contributions to these sinking funds amounted to nearly ,£40,000. Under the new Bill, however, it seemed that the local bodies, in addition to paying the 3I per cent, interest, must also provide a sinking fund of at least 1 per cent, for years, when the loan would be extinguished. Thus for that term the local bodies would pay as against per cent, for 41 years as at present. The effect of the Bill, it seemed, would be to save the Consolidated Fund at the expense of the local bodies. » Sir Joseph Ward : Which local bodies are you speaking of ? Mr Wilford : The Hutt bodies.

Sir Joseph Ward: Not the bodies of the whole of New Zealand ?

Mr Wilford : No,

Mr Bunny said that the position affected all the local bodies in the Dominion. The question was whether the local bodies were to be deprived of the beneficieut system that they had enjoyed since 1886. The Dower Hutt Borough Council had arranged for a loan of ,£IO,OOO under the present system, at per cent. That would not be affected, but he was thinking of the future. Under the new system the local authorities would have to pay in all about 5 per cent., and they would also lose the present advantage of being able to raise an additional 10 per cent, of a loan without a poll. Mr Wilford also referred to the question of harbour boards. In the interpretation clause of the new Bill,' “ district ’’ included “harbour district,” but “local bodies ” were defined as meaning only bodies empowered to raise rates.

Sir Joseph Ward said that it was proposed to repeal the present system altogether. There was not the slightest intention on the part of the Government to extend the present practice of paying the sinking funds to the large system which it was proposed to inaugurate, and which would run into perhaps ten or fifteen millions in the course of a few years. The deputation could hardly be aware of the large amount of money that had been asked for by the local bodies during the past 18 months or two years. The Government had probably had applications amounting to half a million in excess of the limited sum that they had authority to lend. One local authority in the North Island was at present wantiug ,£52,000, and could not move without it. It was suggested that because the Government provided the sinking funds in the present minor scheme it should be extended to the larger scheme. It would be madness to attempt anything of the kind. If a local body got its money at 3% per cent under the new scheme, and was not prepared to pay a sinking fund in addition, it ought to do without the money altogether. In some cases £20,000 or £3O) 000 was asked for, forj drainage, but this could not be obtained under the present system. The Hutt Council had done very well to get its £IO,OOO, If the House did not want the new scheme, all that it had to do was to say so. He did not intend to apply the present system of sinking funds in regard to the larger scheme, Mr Guinness: You intend to give a guarantee instead of the contribution ?

Sir Joseph Ward : That is so. Mr Massey expressed a doubt as to whether the money would always be obtainable at 3* per cent.

Sir Joseph Ward: There may be times when we cannot get it at that rate, but at such times we will stand off the market. I look forward, however, to being able to get money as low as 3 per cent. Mr Massey: Not yet! He added that under the new scheme the local bodies in the out districts would be placed in a worse position than at present.

Sir Joseph Ward, in replying to Mr Wilford’s remark regarding harbour boards, said that these bodies could not be included in the scheme at present. Some of the boards wanted to borrow a million in one loan, and it would be dangerous for the Government to give them its guarantee without any security in regard to rates.