Modest Millions

Sun (Auckland), Volume I, Issue 219, 5 December 1927, Page 8

Modest Millions

NEW ZEALAND’S PUBLIC DEBT

The Great Loan Land”

PAY as you go, my lad, pay as you go,” was the advice a financier once tendered to his son. “But, father, what if I can’t pay,” was the agonised query. “Then don t go, said the parent. , It is recognised that such rigid principles as these ao not apply to public or local body finance. If they did Neu Zealand would still be a roadless wilderness, but unsaddled by a total debt that is now nearly three hundred millions.

riNCE in a while a politican or an alderman mentions with gratificaton that a fresh loan has been raised with ease on an overseas market.

During the last week the Minister of Finance mentioned to the House the probability that another £7,000.000 would be raised, authority for the transaction having been covered by recent legislation, and the Auckland City Council announced a development on similar lines, the flotation in Loudon of a loan for £450,000. Added to the £5,810.150 which is set out in this year’s Local Authorities’ Handbook as the sum of Auckland’s

indebtedness, the amount of the latest loan raises the city’s total liability to a modest six and a-Quarter millions. Of the other three main centres. Wellington is next to Auckland with £4,670,250, Christchurch with only £917,424 is surprisingly low (though, owing to control by a separate board, it has no tram debt) and canny Dunedin has liabilities amounting ' to £2,238.350. PLEDGES FOR LOANS Assets pledged as security against the loans are in Auckland’s case valued at £6,222,610, which is very little above the total of Wellington’s assets, though much above those of Christchurch, £1,410.477, which are. assessed, at barely half the total credited to Dunedin securities, while outside the four centres Wanganui leads Invercargill in the roster of provincial municipalities. Of Auckland’s six million debt, the lergest share is charged against tramways, £1,618,000. For drainage, sewerage and water supply one and a-quarter millions has been raised, and roading and paving, also, have demanded the expenditure of over one million from loan money. More than £2,000.000 of the liabilities incurred by Auckland to date has to be paid off between 1939 and 1943. Various debts are to be extinguished before that date, including £200,000

odd in loans which mature next year, and between 1943 and 1963 about one million and a-half will be paid off. The total indebtedness of the local bodies of New Zealand, including ail kinds of municipal boards, harbour boards, power boards and drainage boards, is £51,726,897, to which figure it has soared, in 46 years, from the three millions which the local bodies of the country had borrow-ed up to 1881. Very heavy expenditure since the war is reflected in the immense sums put into modern roads, in turn a reflection of the greater volume of motor traffic. Electric-power boards too, have been a new factor. Not until 1921 did a power board come into existence. In that year £14,,i00 was loaned to power authorities. Now they owe £8,745,755. HUNDREDS AND THOUSANDS When the liabilities of the local bodies have been coupled with the State debt, the total public responsibility is discovered to be an almost inconceivable sum, £290,582,375, and this without recent local body loans, or the £7,000,000 loan contemplated by the Government. New Zealand public or State debt is set down in the Year Book as £238,855,478, and it has some interesting features. Just 70 years ago the first public loan was raised in the Colony, by authority of the General Assembly of the day, and the sum involved was £500,000, an amount which a provincial borough council would raise nowadays without a bliuk. In the ’7o’s a vigorous public works policy was adopted, and its cost, plus expenses incurred through the prosecu tion of the Maori wars, had in 18S0 raised the debt to £25,000,000. State enterprise was widely extended in the early ’9Q's, the policy of financial assistance to settlers being instituted, while coal mining was subsidised and 'State insurance systems inaugurated. Hence the public debt had doubled by 1900, and trebled (from the ISBO figure) ten years later. A paralysing increase in the national debt was registered during the war years. The total of the war loans amounted to £82.245.673, and this expenditure was all entirely unproductive. Later loans have been directed toward public works, for which expenditure is classified as reproductive, and the war loan, reduced by nearly seven millions, now stands at £75,333,648. NEW ZEALAND MONEY Originally all the money required by the country was raised in London, but lately New Zealand cash has been available in an Increasing ratio. In 1907 80.38 per cent, of the debt was owed to London financiers, while New Zealand had contributed but 14.81 per cent, of the money. To-day London money is 53.61 per cent, of the total, and New Zealand has put up 44.87 per cent., actual figures* being: London, £128,047,659; New Zealand, £107,164,719; Australia, £3,643,100. New Zealand’s debt per head, exclusive of local body loans, is £169 8s 6d, slightly less than the total debt per head throughout the Australian States. Repayments of the various loans is provided for under a complicated system of finance, and those maturing next year will cost the Government £8.334,466 to buy up. No public estate, but only revenue, is pledged as security. Even on this basis, with conservative valuing, assets exceed liabilities by £9,000,000.