PALMERSTON HOSPITAL.

Shannon News, 20 November 1925, Page 4

PALMERSTON HOSPITAL.

£50,000 NEEDED FOR ADDITIONS. i SHORT OVERDRAFr OR LONG LOAN ' Extensive additions are necessary to ■ th'o Palmerston hospital involving a i call on the contributing bodies for additional capital levies. The matter was : debated at Saturday's meeting of the Horowhenua County Council. The Palnierstoil North Board wrote stating that .for some time past the medical staff of the hospital have been complaining of the over crowded conditions in the wards. Wards built for 25 patients have hud over 30 patients, and beds had to be permanently, placed on the Verandahs. The Board was, therefore, forced to contemplate the building of additional wards, of which two, at least, would be required. Such enlargements and additions would entail an increased nursing staff and quarters, a second operating theatre and a proper bulk-store. This would mean an expenditure of approximately £50,000. Each year a levy would be made for capital expenditure of £2500, this with a subsidy of £2500 would pay off th'e loan in 10 years and interest would come out of the maintenance. For about six years the interest would be, on\an average, somewhere about £IBOO a year, but j would then rapidly diminish. The ! Board realised that asking the contributory local bodies for large additional funds would necessitate higher rates, but the Board was anxious to make the burden as light as possible. Provided no further buildings are done during the ten years, and even if £2OOO per annum proved necessary for non-re-ceiving items, the capital levy need be only approximately £IOO per annum more than the present capital levy of £3725. The levy of £2500, together with the £337 necessary to pay the sinking fund on the present loans (sinking fund is £673 per annumhalf of which is paid by way- of subsidy) and £IOOO per annum for contingencies would mean an. annual- levy of £3837, practically the same as the current year's levy for capital .purposes. By paying off the loan by £SOOO per _ annum half of> the total loan is paid by way of Government subsidy. The chairman said increased accommodation was urgently needed at Palmerston. There wero'.ll&-beds in, the hospital but. at no, : ,time, within the past year were there- fewer? than 140-, patients in the institution aud at one time there were 192 Inmates. The Board, therefore, proposed this scheme of extension subject" to the confirmation of the Health Department. The point they had to consider was as to how the scheme was to be financed. "The suggested building would cost about £50,000 —£25,000 to be found by the local bodies by direct eoatribution or by loan, and £25,000 to be found by sub- j sidy from the Health Department. The

Hospital Board's secretary had suggested that the iirst £25,000 be raised by way,-of. overdraft from the Bank, and that the local bodies repay it by capital levy spread over 10 years. The chairman criticised the- figures quoted in the letter, saying these were pure guesswork. Ho was rather opposed to the scheme i'or the reason that it was suggested that llviy repay thin debt oft' in ten years. It assumed that the buildings would only last ten years, whereas it was quite possible that the usefulness of th'e buildings would continue for at least fifty years. He could not see why they should take all the worry and responsibility which should rightly fall upon posterity, which would receive much of the benefit. Even if there had to be an extension in--10 years then there would surely be an extension of the population and the people would be better able to bear the burden. Under the method proposed they were just going to hand on ;to the-rising generation as a free gift something that they had had to slave for. He put it to the Council that it was not fair to have to shoulder the whole' of that responsibility though they were quite prepared to accept their share of it. The chairman gave particulars of the Board proposal. This provided for a deposit in September 1926 of £SOOO, half from levy arid half from subsjdy. They would uplift £IO,OOO in December 1920, creating a £SOOO overdraft. In April 1927, they would uplift £20,000, arid in September, 1927, -deposit £SOOO, and uplift another £20,000, Thereafter each year they would deposit £SOOO till 1935. The maximum overdraft would be £40,000 in the second- year. The Board secretary's, statement showed the total cost of this loan as follows: Repayment of principal £50,000, interest £12,593, total £'02,593, and it went on to say: "Tlfe Board's preseut Public Trust Office loan is of course for a much longer term than ten years, nameiv 36i years, but it is of interest to note that the total, cost of this loan.

interest and sinking fund will be £104.218 and the principal sum is only £46,000.' ■' . This comparison was a little bit misleading, said Mr. Monk. It showed that £46,000 had actually cost -the Board and local bodies in interest and repayments £104,218. Anyone would think that the present proposal was that the Board would raise £50,000 and repay £62,000 in interest and capital. 'That was not right because the .Board was only raising £25,000, the balance was from subsidy. Ho had been a member of 4he Board for some years and'had found that the capital expenditure increased as would also the levy for upkeep, if there were more buildings and more nurses and patients. He would not recommend any local body to accept these figures.

-Cr. Catley: ' Have they been before the Hospital Board? The chairman; Not for diseussion

The capital levy is gradually increasing. The chairman said that while the present rate of interest was 6J per cent, in a few years it might be 5 or 8 per,, cent, while the rate 6f Government subsidy might also bo altered in five years' time. These wore points to bo considered in connection with the scheme. Personally, said the chairman, he favoured a longer dated loan being taken up and spread over a larger number of years. Cr. Broadbelt said the chairman had put the matter very cully before the Council. Ho was of the opinion that the period proposed w \s too short, but the principle of payment by levy was sound. The chairman: Prom the Hospital Board's point of view it may be, but is it from that of tno contributing bodies? This, is a direct capital levy over 10 years and so:ae of those coming behind us should bear this burden. We can't bear it at iHe present time — it would cost us another £IOOO a'year.

Cr. Broadbelt said that as members of both bodies they had to use their own judgment and consider whether the scheme was sound. Ho considered it was, but agreed that the- period should be longer than ten years, but it would bo a mistaJ.o to make it 35 years. The chairman said the increase in maintenance as a re ult of the additional buildings would be £BOOO a year and Horowhenua's rharo would be £IOOO. , Cr. Broadbelt: Wc must expect that increasing the sizo of the hospital will a!.-o increase the maintenance. The chairman: >Th it is so but_ you •• nh <jJinnW«>r i)u> m •.'ote/iantfd wiucaevcr way it is'don o. It would be easier to spread the capital cost ov'er 20 yours. Cr. Broadbelt: If the money has to be raisefl it is encumlent on us to raise it in the cheapest possible way. The chairman: But is this tlie cheapest way? Cr. Broadbelt said his opinion was that the levy system was sound but the time should be longer. Cr. Harkness asked whether the levy could not be based on a sliding scale increasing in accordance with the estimated population over a 20 year period, and whether the Board was building for the requirements 20 years hence. The chairman: We are building for the requirements of to-day.. With these additions.we will o:ily have ten beds in excess of present needs. Cr. Harkness: Then in ten years you will have to build again. The chairman: The increased population will then share the increased burden. We are putting up buildings now that they are going to get the benefit.of. Are we going to ask them for a share of the cost or hand the buildings to-them as a free gift? Cr. Harkness considered that if they

could get a 36 years term—accept it, and so spread the interest equitably over the population. Cr. Ryder thought it would be a better deal, to get this money from, say, the Public Trust than from the banks. The chairman said that with institutions like the Public Trust it became* necessary to create a special sinking fund which would buy out the debentures. Palmerston North hospital has been in the fortunate position of only having raised one loan. Their debt today compared very with other districts, because in earlier years, most of their building was done by bequests, public contributions and subsides. Most of the local bodies had agreed with the scheme but he did not know whether they had understood the position. Palinefston North was very much below the Dominion average in number of beds per hundred-of population. The average for Palmerston was 2.1, whereas in Hawke's Bay it was 4.(3, in Wangahui 3,\ and the Dominion figures were 3.2. The building scheme, was therefore absolutely necessary. Cr. Harkn'ess said it meant this County would have to find a good deal more money for hospital expenses—close on £4OO0 —and the rates wou-'d have to go up. * The chairman said that was so,, and therefore the loan should be spread over as long a .period as possible. So far as the Hospital Board was concerned the burden was going to fail on the local bodies, and it did not matter how long a period the loan was for. Jf the period suited the local, bodies he failed to s'ee what the Hospital Board had to worry about. So far as the / collection of feds was concerned there had been ! a great improvement. Iu the early '■part of the year the collection had amounted to over £4OO a month, while j latterly,they had been at the rate of j £6OO a month. Another point he would like to mention was that it cost the Board £SOOO a year for the maintenance of district patients in sanatoria and various Government institutions. Before patients entered these institutions the Board had to guarantee their maintenance while there. ', In answer to Cr. Jensen the chairman saidi the Palmerston Board had nothing whatever to do with the Otaki hospital except ihat it paid the Health Depart-" ment 9s per day per patient. On <the motion of Or. Harkness the following was carried:-"This Council is in sympathy with the general scheme o£ additions as submited by the Palmerston North Hospital Board, but is strongly of the opinion that the loan should be spread over 26 years, instead of 10 years-as suggested."