INTEREST ON LOAN.

Auckland Star, Volume LX, Issue 221, 18 September 1929, Page 8

INTEREST ON LOAN.

DEPARTMENTAL SUGGESTION. WRITING THE MONEY OFF. EDUCATION BOARD INDIGNANT. "NOT PLAYING THE GAME." Interest amounting to over £3000 on a loan from .the Auckland Education Board to the Education Department seven years ago was asked by the Department to be foregone in a memorandum to the board this morning. It was decided to restate the loan arrangements to the Department. The memorandum from tho Department stated that Cabinet had approved of the sum of £9328 advanced by the board in 1922 from its rebuilding fund in connection with the purchase of tho Training College Hostel. The Department said interest had not been included, and considered it reasonable that tho board should forego the interest. It could not see that any good object would bo attained if the refund were paid from the public accounts to the board's rebuilding account. Such money could be expended only with the approval of the Minister. The Department asked the board to approve of the expenditure of the sum on several of the most urgent building requirements, for which applications were before the Department. The Department preferred this method to the expenditure of the whole sum on such large rebuilding works as those at Parnell and Richmond Road schools. It was hoped that negotiations over the new Parnell site would be sufficiently advanced to justify approval of a grant this financial year. Such a grant would be considered independent of the refund money. "Honouring the Contract." The chairman, Mr. A. Burns, said the Department accepted the board's loan seven years ago for the purchase of a hostel. The debt to the board was acknowledged in an Act, and the loan carried 5 per cent'interest. Instead of honouring the contract, the Department seemed to wish to confiscate the amount. The proposal was not fair and the board should be asked how the accumulated money should be spent. The money was really overdue to the board two years. It might now be spent on one or two schools in the city, when it should bo distributed throughout the province!. Mr. Burns did not think that the board need quibble over the interest. It should be concerned over the main sum. There were works on which the board could pay half the cost and the Government could provide the other half. "The board should exert its rights," said Mr. H. S. W. King. "The money was advanced to the Department when it was short of funds, and I regard the Mn as a business contract. Now the Department wants to take part in the expenditure of the board's own money, and also wants the Minister to give his approval of payment. It can hardly be called interference, but I think the Department is not playing the game. I think that the Department's suggestion to instruct the. board how to spend the loan payments due, should be opposed." Mr. T. U. Wells estimated that the interest due to the board would be well oyer £3000. The board was being asked to forego the sum. and if the Department thought at the time of .the loan the board should not have the interest it should have said so. It was surely a breach of contract.

"We have not pressed for payment," claimed Mr. Burns. "The proposal comes from the Department alone." Mr. F. A. Snell: The Department should hand the money back unconditionally. Mr. E. C. Banks considered that the Department should keep to its contract. Mr. Burns: The proposal appears to be confiscation.

It was decided to ask the Department to proceed in 'the terms of the contract. The board will restate the position.