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Taranaki Daily News, Volume LIV, Issue 279, 22 May 1912, Page 4

LOANS TO LOCAL BODIES. The decision of the State Guaranteed Advances Department not to grant further loans to local bodies which either have 'h»d a loan previously, or have borrowed up to £SOOO has come as a bombshell to many of the local bodies. The Department points out that already the amount of funds available is not sufficient to fulfil requirements, and in consequence the above course had to be adopted. The office is still refusing to lend money for the purpose of paying off debts. It points out that local bodies in New Zealand owe £16,000,000, apart from what they have borrowed from the Government, and if loans were granted by the Department for the purpose of discharging those liabilities the amount would be greatly in excess of the amount which tbe-Department can lend annually. Further, no loans are made for electric light, tramways, or other municipal luxuries. The Department is confining its loans as far as possible to such works as tracks, roads, bridges, drainage, and water supply. Whilst no exception can be taken to the Department not lending to pay off debts, it will mean a very serioua thing to those county councils that have bad roads and inadequate bridges to maintain or renew, if they are unable to borrow cheaply from the Government. If the decision of the Department stands, it means that the county councils will, in the event of their wanting further loans, be forced into the open money market, where they will have to pay much higher rates than those to which they have been accustomed, or cease the work for Which the loans may be required. The first course will entail a heavier demand on the settler, who in most cases in the l undeveloped parts of the country ie burf dened quite heavily enough already, and the alternative will produce stagnation and retrogression. Ministers will doubtless seek justification for their action in the supposition that the country has pronounced against further borrowing, and that only by borrowing can the demands of the local bodies be satisfied, but, surely, no one with any knowledge of the huge amount of developmental work still to be done can honestly blame the Government for borrowing for such a necessary and reproductive purpose. The Opposition declaim violently against the Government's borrowing policy, but if they were in power to-morrow, the Opposition would be obliged to borrow, or hamper the progress of the country. It is to be hoped that the Government will reconsider their decision not to lend money to local bodies, at any rate in regard to county councils that are engaged in the arduous work of keeping communications open for backblocks settlers.