INTEREST ON ADVANCES

Pukekohe & Waiuku Times, Volume 2, Issue 103, 20 June 1913, Page 1

INTEREST ON ADVANCES

FORCING AN INCREASED RATE

PUKEKOHE EAST ROAD BOARD PROTESTS

At iait Saturday's meeting of Ihe Pukekoha East Road Board, the action of ParliEment, in making increased rates of interest retrospective—upon loans to local bodies that had already been arrarged—came in for some very hot criticism. As this matter affects a cumber of local bodies throughout this district the discussion, and the correspondence that was read, will be of wide interest. AN OVERDRAWN ACCOUNT. Mr Allan, Chairman, opened the discussion by remarking that the bank account was considerably overdrawn owing to the £750, which the Board had signed debentures for, not being availabe unless the Board paid J per cett. extra with 1 per cent, sinking fund. He was mszed at the action of the Government, and wrote to Mr Massay. PRIME MINISTER'S REPLY. Under date May 12th, the Hon. Mr Massey iep!ied: "Replying to yjur letter of the 7th inst, the difficulty of your Board is, a3 far as I am able to see, not a particularly sericus one, inasmuch as the Advances Board is not raising any objection to letting you have the money, but only insisting on your Board paying the rate of interest which the Government is in turn to pay for the money raised for these purposes, ihe amendment of last session was rendered necessary by the fact that the Advances Board, previous to the meeting of Parliament, had provisionally arranged to Eupply a number of local bodies with money at a certain rate of interest, Suddenly the price of money went up in England, and it was found that in the aggregate the Government would te put to a somewhat serious loss, that is to say that if the Board lent money at less than cost price then there was no other alternative than to call upon the taxpayers to make up the difference. This, of course, cculd not be consented to, and there was no alternative but to pass the .Act to which the Superintendent refers, It is not a breach of faith ; in the ordinary sense of the term. ! It is simply removing a mistake j which should rot have made, and which has caused a lot of trouble and heart-burning in Wellington. I have not seen the Superintendent of the Advances Department, but will do so if necessary. However, as I understand it your money will be forthcoming, and the only difference it makes to your Board is the difference between four and seven-eighths per cent, and four and a-half per cent, with sinking fund added."

j THE CHAIRMAN'S COMMENTS, j To thia Mr Al'an's comment was j that the money was borrowed, the ! debentures signed, and the cash was to be paid within six months' time. "The thing is absolutely rotten and indefensible," said Mr Allan. "If a privaie individual tried to do that sort of thing he would be put in gaol. Yet here was a Government trying tj put up a local body after the agreement had been signed, The trouble with the Hoard is that : we hav; spent, the money; we are j under the thumb of the Government, and they can do pretty much ' as they like. Still, the Eoard should fight for its position if it could." I LEIIERS AND TELEGRAMS. Mr Allan went on to say that he wrote again to the Prime Minister, and on May 23rd Mr Massey again answered : "I am in receipt of your letter cf the 20th inst. with further reference to the balance of loan to the Pukekohe East Road Board. As indicated in my pievious letter the matter has received further consideration, and I am informed that the Advances Board has authorised the balance of the loan payable, £750, to be duly remitted to the Pukekohe East Road Board. Steps «re being taken accordingly to have this amount lodged to the Board's credit," On May 31st the Advances Office wired:—"The Prime Minister has asked me if I can expedite payment of the balance of the loan, payable to your Board. Amount will go forward immediately on return of the debentures forwarded on 22nd inst. Terms cf Act, 1912, are emphatic, and money cannot be voted except at increased rate." Mr Allan wired sharply to Mr Massey (May 30th)Advances Office seeking fresh debentures at increased rate, Pukekohe East loan. Please sea Superiutendent. and get money forwarded without more humbug," To which Mr Massey answered:— "The matter is cot a departmental one. It is a difficuty between State Guaranteed Advances Board and the local bodies concerned, but Parliament has by statute "decided that r.o local bodies, except a back-blocks district, can borrow at less than the rate of interest which taxpayers have to pay for borrowed mo.iey, and neither Ministers rot Board can get away from this." Mr Allan rejoined (May 31st) : "We complied with Act and sianed debentures 6 months ago. Your letter 23rd stated money being lodged to Board's credit. statute can undo an agreement. We decline to pay increased interest and Department should stick to its covenant," Still again Mr Allan wired (June 2nd):—" We only ask Advances Board to fulfil signed agreement. No statute can undo this. Evidently we are not getting the money, so will refer to my Board." LEITER TO MR FULTON. Mr Fulton eaid he had also written to the Prime Minister who, under date June 12th, had replied, saying:— "Replying to your letter of the 7th inat., I might cay that I have had some correspondence with the Chairman of your Board, Mr Allan, with regard t] your loan, ar.d I do cot know that 1 can say very much more now than what I stated in my letters and telegrams to him. The real trouble is that owing to want of foresight and want of judgment on the part of the people who wire then entrusted with the manage-

ment cf the; Advances Department, 1 the taxpayers were being let in for a very serious Lsa, and there was mily one way by which the difficulty could te remedied, and that was by Act of Parliament. Consequently Parliament agreed to the passim* of a statute which provides that after the date mentioned in the statute itself, no money should be lent below its actual cost, except in the case of back-blocks districts where development work might be going on. Ea3t Pukekohe, I hardly think, would came under the latter heading, but in consequence cf the charges which were necessary at the time, your Boaid has been called upon to pay a slightly higher rate of interest than was intended by the officials who we'd in charge when the loan was applied for. The provisions nf the Act cannot possibly be gore back upon. This- must be complied with, otherwise the money cannot be handed over. That is the actual ; position. Many other local bodies ! have hsd to do precisely the same ! thing, and have done it without a i single complaint, recognising that a ; mistake was made originally and that i it had to be remedied. I have tried | to straighten up this matter for your j Board, but neither I nor anyone else j can do it except under the Act of, last year. This is the actual | position, as I have already said, i [ and 1 of what I know when I I say there is not the slightest J chance of Parliament going back on what, unfortunately, was rendered necessary by variety of circumstances which existed in the past.'* ACCEPTANCE UNDER PROTEST. Mr Wilcox (after all the correspondence had been read): That is plain enough. You cannot get the money. Mr Allan: It is a swinal?. The Whangarei people are going to test the question in the courts, arid Mr Skerrett says they have a good , case. , Mr Tooman: It is a breach of faith. ' j Mr O'Connor: Can't we wait 9 | , Mr frulton: No chance; we must; get the money now. He asked the j clerk what the difference would cost. The clerk (Mr Lauer) said the , £750 was originally granted at £3 15s per cent., paying the sinking fund and everything. Mr Masses letter afterwards said we wouli have to pay, on the money a ready granted, 41 per cent., or inclusive ot the sinking fund, 5i per cent. Mr Wilcox: It is an awkward position, as every division is overdrawn. Mr O'Connor: It only makes a difference of £l3. ifcarfSbairjitan: Ave = Rut for how long? Thirteen pounds a year for 40 years! We should pay the in- ( creased amount under protest; if the Whargarei body is successful we : would come in. Mr O'Connor eaid he thought it was only fair of the Government to charge the Board what it cost them for the money. I The Chairman: The point now is: Are you going to pay up or are you going without the money?

Mr Wilcox: I will move, That we accept the money at the increased rate under protest. Mr Fulton seconded the motion, which was carried.