LOANS AND SECURITY.

Auckland Star, Volume LX, Issue 55, 6 March 1929, Page 12

LOANS AND SECURITY.

TRAMWAYS UNDERTAKING.

MR. ALLTJM EXPLAINS.

"RATE WILL NOT BE COLLECTED."

The Auckland tramway undertaking never has cost the ratepayers a penny by way of levies or rates, and the chances are that it never will. Mr. J. A. C. Allum, chairman of the Auckland Transport Board, made that clear yesterday afternoon at a meeting of the board, in presenting a report relative to tho striking of a special rate as security for the Transport Board's liability to the City Council.

The. Transport Commission recommended that the board should have no power to rate, but shoull collect moneys it might require by means of levies on existing loeaf bodies. However, the Auckland Transport Board Act makes provision for the striking of special rates by the board, so that there may be security for loans.

Mr. Allum stated in his report that the question arose as to what the board should do in relation to its special loans. If it decided to adopt the policy of striking special rates for loans, then probably it would be better to carry this policy out consistently and strike a special rate for the city loans. Otherwise the board might be in the position at some future date of having to collect a levy from local bodies for the city Iqans and a special rate from individual ratepayers for other loans.

Recommendation to Strike. There was to special rate for the original city loan of £1,250,000. There would be a duplication in the city in respect of only £603,000. Secondly, the board's position was that it had assumed responsibility, and must provide for this liability. If no special rate was now struck it could not afteriVflrds b6 resorted to by the board. In view of all the circumstances, Mr. Allum was of opinion that it would be desirable to adopt the policy of striking special rates for all the board's loans, including the liability to the city. He recommended accordingly.

"It may be added," the report concluded, "that no special rate has been collected and the undertaking ha> always been conducted without cost to the ratepayers." The report was adopted by the board.

Mr. M. J. Coyle said the board was never likely to collect a rate for tram.way purposes.

Revenue will Repay Loans. Mr. A. J. Entrican said the public should understand quite clearly that the revenue would be used to repay the loans, except in case of loss, which was most unlikely.

Levies-could be struck to meet losses, but special rates were struck for the purpose of providing security for loans, said" Mr. E. H. Potter. No on© would lend money unless a rate was struck as security. The Auckland Power Board had struck a rate for security purposes, but that rate never had been collected.

The tramways must never cost the ratepayers a penny, because they were a trading concern, said Mr. Allum. However, the board could not afford not to strike a rate as security. Striking a rate and collecting that rate were two entirely different things.

£300,000 Loan Proposal. The board has placed loan proposals in the hands of the Local Government Loans Board, which must give its approval before a poll of ratepayers can be taken, Mr. Allum explained that the ratepayers will be asked to consent to a /.oan of £300,000 for expenditure on extensions and purchase of necessary rolling stock. There will be a second proposal to borrow £625,000, but this amount is included in the larger sum and will be put to the ratepayers so that they may vote in favour of a small loan if the major sum is not regarded favourably. The board is hopeful that the major sum will be authorised.

Mr. Entrican said he thought it was a great mistake to place both sums before the public.

The chairman said there would be further opportunities for discussion. "I don't know that there should be " said Mr. Coyle. "I want to see our loan proposals launched as soon as possible."

Mr. Allum said the Local Government Loans Board would take four or five weeks to attend to the proposals.