LOAN MONEY.

Taranaki Daily News, 1 March 1921, Page 5

LOAN MONEY.

HIGHER INTEREST REFUSED. ANOTHER LETTER FROM PREMIER. NEW PLYMOUTH WORK DELAYED. FURTHER STEPS PROPOSED. Further reference to the request to the Prime Minister to advance the limit for the rate of interest on local bodies’ loans to 6 per cent, was made at the meeting of the New Plymouth Borough Council last night, when a reply was received from Mr. Massey declining to allow the council to pay more than 52 per cent. The council did not take this reply as final, however, and decided to make further representations to the Finance Minister on the Subject. It will be remembered that some time ago a deputation from the council interviewed Mr. Massey, who later replied that he could not accede to the request. Proceeding with the matter further the council forwarded a lengthy communication setting out the position in detail, and it is in answer to this that the latest reply refers. Under date of February 22 the Prime Minister wrote: “It is with great regret that I have been compelled to advise you tlyit I am unable to alter the policy which has already been determined in regard to the raising of loans by local bodies. Five and three-quarter per cent is the highest rate of interest which is being authorised at the present moment, and, as the deputation was informed in my office, I could not see my way to granting authority to raise a loan at six per cent unless the ratepayers specially authorise such a rate. The position in regard to the raiding of moneys in New Zealand is at the present time very difficult, and I sincerely hope the existing stringency in the money market will not continue.” “Notwithstanding that,” said the Mayor (Mr. F. E. Wilson), “Mr. Massey has since authorised the Auckland City Council to pay 6 per cent.” In reply to Cr. J. Kibby, the Mayor said the Wanganui Council was also another local body that had received permission to advance the rate. THE COUNCIL’S POSITION.

A full explanation of the position as viewed from the council’s standpoint was set out in the letter forwarded to the Premier by the general manager (Mr. F. T. Bellringer) on February 4, and a copy of this was read at last night’s meeting. The letter stated: My council is grievously disappointed at your decision, as- it was thought that the deputation whiph recently waited upon you had impressed you with the absolute necessity of floating these loans owing to the particular circumstances attaching to the Npw Plymouth electricity undertaking. It was anticipated that great difficulty would have been experienced in floating the loan at 6 per cent. At 5% per cent the council considers the task impossible, and under the circumstances I am directed to earnestly urge that the matter be reconsidered by you. In conversation with the deputation you admitted that you realised the importance and the urgency of proceeding with hydroelectric works and the enormous saving of coal and other fuel which would he effected thereby. It is unnecessary, therefore, for me to stress this point, and this letter can be confined to New Plymouth’s claim for special treatment. Our plant is greatly over-taxed and there is no stand-by plant. It is only a matter of time before a complete breakdown must of necessity occur. Stand-by plant, and plant for increasing the output, has actually been ordered and will arrive during the next few months. To enable this plant to be operated more water is required at the power-house, and to provide this extra water large alterations are being made at the headworks adjoining the river. These works have been under construction for over fifteen months and will take at least another twelve months to complete. If the loans cannot be raised disaster to the undertaking must eventually occur. As already pointed out the" plant is greatly over-taxed and is running on practically a full load 24 hours a day. Under these circumstances no opportunity arises to give the plant that periodical overhaul which is absolutely essential. The extensions we are ’ now making should have been made years ago, but the council deferred the work in response to a general request from the Government that large expenditures of money should not be made during the war period. This has turned out to be a very costly mistake, as even three years ago the money could have been raised without difficulty at a lower rate and the work itself could have been carried out at least 50 per cent cheaper. POWER FOR INDUSTRIES.

On our electrical undertaking depend manv establishments carrying out essential industries. These include meat works, dairy produce, freezing works, dairy factories, farmers, milk pasteurising’, abattoirs, butchers, bakers,, iron foundries, municipal tramways, printing works, harbor works, stone crushing and other industries too numerous to mention. Others depending upon us- for light and heat include the public hospital, N.Z. railways, post office, technical school, and others. It our pliint breaks down all these industries will be thrown out of gear. tn the case of the two freezing works alone a breakdown would mean the loss of thousands of pounds. _ The counqil desires to put its works in a position that a complete breakdown cannot arise, and it now rests with the Government to say whethei such a breakdown shall occur. If permission to raise the loans at a reasonable rate is refused then the Government must accept the responsibility for the breakdown, which, in the opinion of the council’s expert advisers, must occur unless stand-by plant be provided. In conversation with the deputation you inferred that Wanganui had been granted permission to pay 6 per cent because its work was more important and more urgent than the work at New Plymouth. If you were fully sized of the facts I have no hesitation in saying that you would readily admit that New Plymouth needs are infinitely more urgent and more important than those of Wanganui. It is admitted that the plant at Wanganui is in a desperate condition, but this is not the essence of the question. The main point to be considered is what is the plant for. me electrical plant at Wanganui is used almost entirely for the tramways which is not an essential industry. gi th* tramways Wanganui probably

does not supply* electrical energy ft fifty consumers. The industries u Wanganui depend upon gas and plants. On the other hand, New Ply< mouth supplies 3500 consumers, include ing the essential industries referred to in an earlier portion* of this letter. The, very life of the community upon the regular adequate supply of electrical power. These consumers years ago threw out their gas and steam plants and adopted electrical plant, depending upon the Council to supply thq. electrical energy. KEY TO THE BIG SCHEME. If, owing to a breakdown of our plants electrical energy is not forthcoming these industries will suffer enormous losses and will be seriously crippled. In the case of the two freezing works the losses would be simply enormous. The deputation gathered from you that if our plant had been in the same condition as Wanganui our application would have been favorably considered, but why wait until we are in such a desperate condition when by a little foresight such a calamity can be avoided! If you have any doubts as to the bona tides of my council’s contention in this matter these can easily be removed by; sending your Chief Electrical Engineer to investigate the position. We have no doubt whatever what hit advice would be if he made a complete investigation. Other points in connection with our application which were brought under your notice by the deputation are set out below in order that they may not be overlooked:— (a) The extension works hpve been proceedings for over fifteen It is part of a very largo scheme and the council has had tg make its arrangements in advance. Expenditure and liabilities to date amount to approximately £60,000. Machinery on order is expected to arrive very shortly and it is essential to sell the debentures in order to pay for the machinery on arrival. If further money cannot be raised the council will suffer heavy financial loss in addition to which it will have work costing £60,000 lying idle and not earning a penny to meet the interest and sinking fund charges. (b) Our works are really part of the Government large scheme of hydro-electric development, and with--out our scheme the Government will not be able to satisfactorily supply Taranaki. (c) Under our license we are bound to keep a verp large supply of electrical current available for the Government to draw upon. No less than one half of the capacity of the plant installed has to be reserved for this purpose, the Government paying for the current supplied at Id per unit for certain hours of the day and y 2 d per unit for certain hours of the night. (d) Under our license we are bound to complete the works before the 19th July, 1922. If the works go right ahegd xve can comply with this condition, but not otherwise. My council earnestly trust that you will appreciate our position and that you will agree that our needs are infinitely greater than those of either the Auckland Harbor Board or of the Wanganui Borough Council. £22,600 TRAMWAY LOAN. I am also directed to respectfully request you to reconsider your decision not to allow an increase in the rate of interest in connection with this loan. The position in regard to this loan is admittedly not so urgent as in the case of the hydro-electric loans, but it is still urgent The council has ordered three tramcars, at an approximate cost of £ll,OOO, and these cars will arrive in about two months’ time. The council at present has only six cars and these are unable to cope with the traffic at normal times, even by over-crowding. At rush hours and on holidays the traffic ia hopelessly in excess of the transport available. Only six cars being available these cars have to be run continuously and there is no chance of giving them regular overhaul. Temporary repairs are affected between midnight, when the cars istop running and 6.30 a.m_, when the service recommences. There is no time, however, for a complete overhaul and it was therefore necessary to provide three extra cars. These cars were ordered nearly isix months ago, the council at that time being confident that before the cars arrived sufficient debentures would have been sold to provide the purchase money. It wag. thought that the worst that could happen would be that an advance might have to be obtained from the bank, secured by the hypothecation of the debentures. Since then, however, money has hardened and the banks have stopped making advances of this nature. If the council is permitted to pay 6 per cent? on this Joan we have every reason to believe that a certain financial institution with whom we are in touch will find the €ll,OOO The r.nmc'l cannot posOly repudiate its liability for tlie purenase mopey, and it will be necessary to find the money somehow. Unless, however, you grant permission to pay the six per cent 'interest, fine council will experience the gravest difficulty in meeting its obligations. I Jiave written at considerable length m JMer to fully explain these two matters, the council hoping in this way to obviate the necessity of sending a further deputation to Wellington to wait upon von in regard thereto. Mr. ’Bellringer suggested to the council that as a last resort the Prime Minister might be asked, in the event of the ratepayers’ consent being obtained, whether he will approve of a 6 per cent rate. Mr. Bellringer pointed out that in any case the council would be taking a poll in April. On the 'motion of Cr. V. Griffiths, seconded by Cr. A. E. Sykes, it was decided to write to Mr. Massey on tor lines suggested by the general manager.