LOAN SINKING FUNDS.

Auckland Star, Volume LXIII, Issue 121, 24 May 1932, Page 3

LOAN SINKING FUNDS.

POSTPONEMENT OF PAYMENT. LOOA'L BODIES' SUGGESTION. The postponement of the payment of loan sinking funds is suggested by the Blenheim Borough Council, in a circular letter to borough councils. It says that after serious consideration of the question of how ratepayers may be given some relief by a reduction of rates, ithas come to the conclusion that to postpone the payment of loan sinking funds for a period of at least two years would be the best, and is perhaps the only, method now available.

Tlio Blenheim Council says that, like most local bodies in the Dominion, it lias reduced salaries and wages, and cut down all expenditure during the past two years, until the minimum has been reached. The recent 10 per cent reduction in interest "will help somewhat, but the saving in this direction fior most boroughs is a small one, and on the othe'r hand, the high sinking fund rate lately insisted upon by the Loans Board for renewal loans has resulted in the maintenance of fixed annual charges at the old high figures. Owners of properties who have been compelled by recent legislation to reduce rents 20 per cent will now find it difficult to make ends meet unless further reductions in rates can be made. All local bodies are compelled to spend considerable sums in material, plant and supervision in order to provide useful work for unemployed men, and it appears impossible that this extra cost can be eliminated for the next few years. "We believe," says the Blenheim Council, "that the excellent example of •the Government lending Departments in postponing the repayment of principal (equivalent to sinking fund) until the end of the loan period should be followed in the case of local bodies, as the security of the loan is not vitally affected, that being maintained by a special rate." The council proposes to submit this matter to the Municipal Association with a request that Government sanction be obtained. A similar proposal lias already been made to the Minister of Finance by the New Lynn Borough Council, but the | Minister rejected it.