H.—3la

8

speaking, maintenance, and this view your Commission, of course, is prepared to concede. On the other hand, it was urged that if the policy of a flat-rate subsidy on capital expenditure were maintained, it would be consistent to' extend that policy to the interest on loans raised for that purpose. Viewing the matter from its various aspects,.your Commission considers it would be equitable that the flat-rate subsidy of £l for £l should be the basis of Government contribution in respect to interest on loan-moneys expended on buildings or land. Building Funds. Provision is made in section. 12, Hospitals and Charitable Institutions Amendment Act, 1913, by which building funds may be established, by Hospital Boards. Your Commission considers it is inadvisable that such building funds should be provided out of maintenance-moneys, and is of opinion that the word " revenue " should be deleted, and " capital receipts " inserted in lieu thereof ; and, further, after the words " property of the Board " the words " or for any other capital expenditure " be inserted. As the law now stands, Hospital Boards can create building funds out of maintenance levies that may have carried a greater subsidy than £l for £l, which is contrary to the principle that capital expenditure should receive a flat rate of subsidy. Para. 1. (b). Generally as the best means of meeting the heavy cost of proposed capital works. Cost of Undertakings. A schedule of works was submitted by the Health Department showing the total capital undertakings by Hospital Boards, and this disclosed a projected expenditure of £1,237,601. This includes erection of buildings, purchase of land, installation of plant, water-supply, drainage, ambulances, lighting, and equipment. It would, of course, be unreasonable to insist that so large an amount should be raised by Boards by levy and subsidy only, and your Commission recommends that Boards be permitted to raise money on loan for capital expenditure on either buildings or land, which, having regard to each Board's financial standing and resources, would be deemed to be a large expenditure. Such capital expenditure should be limited to the erection of, addition to, and alteration of buildings, and the purchase of land, whether required for buildings, farming, or other purposes. In all other cases, including small capital expenditure on buildings and land, all expenditure on plant, equipment, water-supply, drainage, &c, the right to raise loans should be refused, and such expenditure should be met by levy and subsidy, or donations and subsidy. Your Commission considers that moneys required by Boards for capital works which are comparatively small should not be obtained by loan, and that the cost of plant, equipment, &c, where depreciation is considerable, should be borne only by levy or donations and subsidy. While recommending that permission be granted to Boards to raise loanmoneys for larger capital expenditure, your Commission urges that every encouragement should be given to Boards to raise as much as possible towards such expenditure by public subscriptions. Apart from the material advantage in the increased facilities for the cure and comfort of patients, such appeals are of great benefit in fostering public interest in the hospitals and evoking sympathy with those suffering from sickness. Some notable instances which came before your Commission showed what could be done by well organized appeals to the public for support for some branch of hospital usefulness. The existing system of Government subsidy and hospital control, in effect, makes loans to Hospital Boards State-guaranteed ; and your Commission, viewing it from that aspect, recommends that the Government provide for loans to Hospital. Boards being obtained direct from or through a Government Department. It is considered unwise that Hospital Boards should be permitted to raise loans on the open market, as necessarily they would be unable to obtain such terms as Stateguaranteed loans should command, and the Government, in directly contributing one-half of the interest payments, would be paying an excessive amount.