The Akaroa Mail. TUESDAY, NOVEMBER 10, 1903 THE LOCAL BODIES' LOANS BILL.

Akaroa Mail and Banks Peninsula Advertiser, Volume LIII, Issue 2820, 10 November 1903, Page 2

The Akaroa Mail. TUESDAY, NOVEMBER 10, 1903 THE LOCAL BODIES' LOANS BILL.

Tui3 Bill should be of interest to Peninsula residents ; for it has affected tho Akiiron and Wainui Road Board's metal lo.ui. In consequence of a new clause the interest has been raised onehalf per cent. The negotiations for the loan, which was being arranged for under the 1901 Act, were suddenly brought to a close by the amendment of this A et, and the loan will now have have to be negotiated under the new Bill. The Borough Council was fortunate in arranging for the septic tank drainage loan before the new Act was passedf The following new clause, which regulates the currency of loans, is the most important in the new Bill: "(I) In all loans granted after the passing of this Act the yearly rate of interest, and the period during which the interest is payable by the local authority, shall, at the option of the local authority, be—

" (a.) Five per centum per annum for a period of twenty-six

yoars; or * (b.) Four and a half per centum per annum for a period of thirty-two years; or " (c.) Four per centum per annum for a period of forty-one years. " (2) Such option shall be exercised by the local authority in its application for the loan. «(3 )At the expiration of the period during which interest is payable the liability of the local authority shall cease without further payment." Mr Allen, member for Bruce, endeavoured to have sub-clause b altered so that the 4| per cent loan lasted thirty-ono years instead of thirty-two. However, the motion was negatived and the loan remains for a term of thirty-two years. In introducing this new clause, the Premier considered allowance should be made for those loans which had been granted provisionally at the time the Act was passed, and he therefore inserted the following condition to the clause :—Provided that any loan provisionally approved or agreed to be granted by the Treasurer at the passing of this Act may be completed as if this section had not passed." Another new clause was added which affecte districts like ours, split up into ridings, and allows for the levying of special rates iv the subdivisions of a County. The following is the clause :— " In the case of a district divided into ridings or subdivisions, nothing herein contained shall be deemed to forbid the payment out of any separate rate made and levied in such riding or subdivision of the charges on any loan raised within the said riding or subdivision where the boundaries of such

special rating district and the riding are coterminous." At the third reading of the Bill, a great deal of opposition was shown to Mr Seddon's raising the rate of interest one-half per cent. Mr Massey, Leader of the Opposition, said that the Premier had not kept his word as regards this new Act. He had announced that it was his intention to lengthen the term of the loan ; but declared he would not raise the rate of interest. This promise he had not kept, for he had practically altered the whole spirit of the 190 l Act and made the local bodies in a far less advantageous position to borrow from the Government. He could noc see why the Premier should bring down this Bill this Session, and not wait to find out if tlje money market, improved.

It certainly does seem a great pity that Mr Seddon has seen fit to raise the charge of interest in these local body loans. The result must be that fewer loans will be negotiated, and as the local bodies make good use of the money lent, the decrease in these loans will be detrimental to the good interests of the Colony. It will mean that local bodies will not be so ready to go in for improvements on a grand scale, for the different terms on which the money is to be procured will cause them to hesitate before deciding to borrow a large sum. The Premier, in reply to the objections of the Opposition, said that he much regretted the need for raising the rate of interest. However, he considered the Colony was losing through

the Government lending money at 4| per cent. He put it that in every £100 the Government lent nt 4| per cent, .£2O was lost per annum, and this loss he Considered wn s not at all justifiable. He recognised the good use made by local bodies of the money but did not think th a t even this compensated for the Government's loss. As Mr liahan pointed out, it appears strange that when the Premier, in presenting the Estimates, spoke in such an assured mann er o f the glorious financial position o f the Colony, he should go to the tro u b] e o f raising the rate of interest for mo ney lent to the local bodies, and a U f or the sake of £1,100 odd per ann^ m _

Mr Seddon has seen fit to amend the 1901 Act, and the Local Bodies Lo ans Amendment Act Bill nnpsed its third reading, and local bodies onn onV borrow at 5 per cent for 26 yeiirs. The Premier said it wns w>l.h regret he raised the rate of interest, and he gave a definite promise, that immediately the money market hoenme more sound, ho would hnve the Act put back into its former wording and allow local bodies money at i\ per cent for 26 years. Tt is a matter of regret that the Akaroa and Wainui Road Board had not proceeded further with the negotiations for "a loan. However, there is always tho hope that the financial outlook will improve and the 1901 Act again come into force. At present, the 1903 Act regulates all loans negotiated by local bodies, and the terms are not by any means so satisfactory,