LOCAL BODY LOANS

Waikato Times, Volume 119, Issue 19895, 26 May 1936, Page 8

LOCAL BODY LOANS

The review of local body operations, made by the Minister of Finance, shows the extent o_f the conversion operations, authorhed in order to lighten the burden of the local authorities during the pro.longed depression. In recent years the great majority of local bodies have placed their loans locally, and recent transactions must have reduced their overseas indebtedness by a. substantial sum. For many years the proportion of the total indebtedness of local bodies hold in the Dominion has grown and must now exceed 70 per cent. There is still a large amount held in Great Britain, but each year sees the Australian holdings reduced, and to-duy they do not account for 5 per cent. of the total. - The transfer of these debts—for unfortunately they have not been-redeemed—must be beneficial. The interest, being paid within the country, helps to increase the income that can be tapped for taxation purposes. In some cases local bodies that had borrowed in London could have redeemed at least a portion of the loans, had it not been for the high exchange rates ruling. The sinking funds provided for that purpose had to be used to meet exchange charges, an aspect to which suflicient attention was not given when the exchange proposals were before Parliament. The State may gain to some extent by the transfer of local body loans from overseas, but it would be a. difficult matter to assess at all accurately the full extent of the movements. The sharp reduc—tions made in the rates of interest within the Dominion will have lowered revenue from income tax, and the low rates at which loans are now being placed will have the same eflect. However, the fact that the local bodies have not experienced difficulty in floating their loans at the current rates shows that there is money available for investment.