LOCAL BODIES’ LOANS.

Taranaki Daily News, 28 July 1922, Page 7

LOCAL BODIES’ LOANS.

STATE GUARANTEE WITHDRAW. THE GROUPING SYSTEM. (From Our Parliamentary Reporter.) Wellington, July 26. Txical bodies’ loans were discussed, briefly in the House of Representatives on Tuesday. The Prime Minister had mentioned that the attitude of the financiers in, London had made it desirable to abadon the practice of putting the Government guarantee behind the loans of local bodies. The financial authorities had given him to understand that a continuance of this method of assisting the local bodies would damage the credit of the Dominion.

Mr. J. McCombs (Lyttelton), suggested that the loqal bodies should be permitted to combine for the purpose of raising a large loan abroad. He believed that if the. combined assets were put behind such a loan, the money would be available on good terms. ' \

Mr. A. S. Malcolm (Clutha) had another suggestion. He thought that for the purpose, of liquidating the antecedent liabilities, the local bodies should be permitted to receive deposits. If the money were taken for five or seven years the arrangement would not be open to objection.

Dr. Thacker (Christchurch East) said that the Christchurch City Council would like to group a number of small loans and- raise one big loan. The Prime Minister replied that the Government had guaranteed a Southland loan, a Thames loan and an Auckland loan. Then the attention of the financial authorities in London had been called to what was going on. The financial authorities indicated to him that if the practice continued it would injure very seripusly the credit of the New Zealand Government, of the Dominion as a whole. He had no hesitation in saying that if. the guarantee system had been continued the Government would not have been able to raise its recent five million loan at 5 per cent, at par, thus creating an Empire record. There was nothing to prevent the local bodies combining now, added the Prime Minister. He had an opinion from the officers of the Treasury that local bodies could group themselves for the purpose of raising a large loan. Mr. Young (Waikato); Wellington got its money satisfactorily without a guarantee.

Mr. Massey: Auckland has jtlst placed a loan at 5% per cent, at par and got the whole of the money in one hour. Mr. Atmore (Nelson): Wellingtofi got its money without the guarantee at tlie same price as the Wellington loan. Mr. Massey: If there is any difficulty about the local bodies combining I am quite prepared to take it into consideration and give the House an opportunity of passing legislation.