HELD TO BE ILLEGAL.

Ashburton Guardian, Volume 56, Issue 246, 30 July 1936, Page 5

HELD TO BE ILLEGAL.

PLAN TO AVOID RATING.

THE SOUTHLAND POWER BOARD. (Per Press Association.) INVERCARGILL, July 29. According to an official , ruling given to the “Southland Times’’ by the New Zealand Treasury, the decision of the Southland Electric Power Board to transfer £IO,OOO from the separate account to the sinking fund, to avoid having to levy a rate in the current year, is illegal, and cannot be put into effect. At the last meeting of the Board, on July 21, the following motion, proposed by Mr William McChesney, was carried :—“That no rates be levied for the current financial year; that the estiniates he amended to providei for a sum of , £IO,OOO being transferred from the separate account to the sinking fund ; ■ and that, if necesr sary, an overdraft be arranged for (against outstandings) in accordance with the usual public body practice.” /The'Treasury ruling is that to transfer £IO,OOO from the separate account to the sinking fund would be contrary to section 9 of the Local Bodies Finance Act, 1921-22, which declares that every local authority shall provide for its ordinary obligations and engagements in ally year out of its revenue- for that year. The Board’s suggested procedure would mean using capital moneys for revenue purposes. It is held that such a transfer could only he additional to the ordinary charge for sinking fund. ‘ ,j" Proposal to Arrange Overdraft. Regarding the proposal to arrange an overdraft, the Treasury’s ruling states that the; overdraft at the end of the year is limited to section 3 (2:) (C) of the Local Bodies Finance Act, 1921-22, to the amount of that year’s revenue outstanding, and unpaid nates of past years cannot .he used as a basis for an overdraft. In other words, if rates are not levied this year, the Board’s overdraft at March 31 next could not exceed the amount of the electricity accounts for the current year then unpaid. Any excess would require the sanction of the Local Government Loans Board.

The Treasury has made inquiries into the board’s prospects of converting its London loan, which is due for repayment on September 15, and reports that the indications are that the board will have to pay a higher rate of Interest than was anticipated six months ago, and that the rate will work out about 4 per cent, sterling, with stamp duties and other expenses of repayment additional, and, of course the exchange to he met on periodical remittances to London.