LOCAL BODIES' FUNDS

Ashburton Guardian, Volume XLII, Issue 9374, 1 November 1921, Page 7

LOCAL BODIES' FUNDS

ANTECEDENT LIABILITY. QUESTION OF BANK OVERDRAFTS. The proposed legislation affecting local bodies' finance which was before 'Parliament recently, was discussed at last night' 8 meeting of the Ashburton Borough Council. The Chairman of the Finance Committee, Mr F. W. Watt, who had examined* the Bill, stated that it proposed to make several very important changes m local body finance law,which should receive the careful consideration of the council. In regard to the existing overdrafts, apparently several local bodies had allowed their finances to drift into a very,, uns&tis-. factory position, which it was proposed to remedy. On March 31 next year, each' local authority, under a penalty of a fine not exceeding £100, to which cv.cry member of the local body would be liable, must send to the Minister for Internal Affairs the following statements: — (1) The sums owing to its bankers; (2) the sums owing on temporary loans or deposits; (3) its revenue for the year then ended; and (4) the name of its bankers. From the amounts owing m overdraft and the temporary loans' account there was to be deducted the uncollected amounts of rates and other revenue and the balance would be called the "antecedent liability," which amount was to be notified to the bank by the Minister. This "antecedent liability" had to be paid off m one of two ways — (1) By means of a permanent loan, which may be raised without taking a poll of the ratepayers and (2) by a system of equal annual repayments out of revenue spread o.ver seven years. After March 31, 1922, each local authority may borrow from its bankers, m anticipation of its r even vie to such an extent as will not at any time during the year exceed two-thirds of the preceding year's revenue, so that at the end of each year ho greater sum would be, owing to the bank on that year's overdraft than the amount of the outstanding revenue. The provisions of section 33 of the Local Bodies' Loan Act, 1913, were to apply to moneys borrowed m excess of the above proposals. That portion of section 33 which was applicable read as follows: — (1) If the local authority at any time borrows any money or issues any debentures m excess of or otherwise than m accordance with the provisions of this Act m that behalf, r or every member of the local authority who consents thereto, shall, for each offence, be liable to a penalty not exceeding £100, to be recovered, with full costs of suit, m any Court of competent jurisdiction; (2) it shall be the duty of the Audit Office to institute the necessary proceedings against any member liable to any such penalty. Mr Watt said that the responsibilities of members of local bodr ies were therefore considerably increased. Under ordinary conditions the provisions of the Bill would no doubt have an excellent effect m regulating the finances of local authorities, but it was open to serious question whether the time was opportune to compel local bodies to borrow to liquidate their overdrafts or to rate with a view to paying off those liabilities under a system of seven annual instalments. Mr Watt moved that the Asßburton Borough Council object to the principles of the proposed Bill; that the member for the district (the Hon. W. Nosworthy) be notified of this decision, and urged to strongly oppose the Bill. Mr Ferriman seconded the motion, which was carried unanimously.