LOCAL BODY LOANS

Taranaki Daily News, 10 September 1940, Page 6

LOCAL BODY LOANS

One of the most satisfactory features of the annual report of the Local Government Loans Board is that the gross debt of local bodies has been reduced considerably in the past nine years. In 1931 the debt was £72,686,000 and at the end of the 1939-40 financial year it had dropped to £68,206,000. The decline is due partly to the supervision exercised by the board, and partly no doubt to the increased application of the amortisation principle to new loans and to converslons. In any case the reduction of debt is a healthy sign. It indicates greater recognition of the wisdom of meeting needs as far as possible from current revenue, and that however desirable proposed public services or amenities might be it is for the community that desires them to meet the bill. There are some of these amenities, as for example large scale drainage or water supply undertakings that it would be impossible to carry out without borrowed money. But with repayment"' by instalments within the term of a loan the tendency to increase local government liabilities with the developifient of a district is kept in check, particularly when maintenance charges are met wholly from revenue. Another fact revealed in the report is that the local body debt held overseas has been reduced considerably in the past few years. In 1931 the debt held in Britain and Australia was approximately £26,000,000. It is now about £ 14,500,000, and it seer. 3 evident that the movement of debt back to the Dominion will continue. Local bodies in Taranaki have found it sounder econamy to pay a high rate of exchange on capital repaid to overseas lenders than to pay exchange on interest payments over a long period. Furthermore, New Zealand hr.s been advised that Great Britain would prefer that all lc 3al body loans that mature this year shouid be paid in full. At a time like the present such a wish becomes a command, and despite the strain on sterling resources it will be well for the Dominion's credit if the repayments of loans raised at London are facilitated. Although there have been occasions when the Local Government Loans Board has adopted a somewhat bureaucratic attitude, its report indicates that its primary function — the prevention of ili-considered borrowing — has been carried out with some success.