SINKING FUNDS.

Auckland Star, Volume LXIII, Issue 225, 22 September 1932, Page 8

SINKING FUNDS.

QUESTION OF CONTROL REDUCED RATE OF INTEREST. ONE TREE HILL OPINIONS. Sinking funds were the subject' of a lengthy report presented to the One Tree Hill Borough Council by -the town clerk, Mr. A. Leese, last evening. One of the objects of the report was to show how the borough had been affected by the recent reduction in interest allowed by the Public Trustee on investments in the common fund. Prior to 1025, said Mr. Leese, the Road Board's sinking funds were controlled by private commissioners, who were two members of the board. In May, 1925, it was decided to appoint the Public Trustee sole commissioner and-all securities were duly transferred, and subsequent instalments paid to him. The net public debt of the borough on April 1 last was £140,510, of which £26,210 was raised from the Treasury and State Advances Department and had no sinking fund. Sinking fund appropriations on the remaining £120,300 totalled £1244 per annum, or 1.03 per cent, and the total accumulated fund on April 1 1 last was £12,502. The borough had raised two loans, totalling £35,000, from the Public Trust Office, on which the sinking fund was 1 per cent. The accumulated fund in respect of those two loans stood at £2715 on April ,1 last and that fund had to remain with the Public Trust, whatever was decided regarding the remainder. In conclusion, Mr. Leese said that there was no doubt that if the council decided to revert to private commissioners a, higher rate of interest than that obtaining at present could be secured, but against that the sinking fund held by the Public Trustee was State guaranteed in respect of principal and interest, whereas some private sinking fund commissioners had recently suffered heavy losses of principal as well as interest. For several years the Public Trustee paid 5} interest in the common fund, and there was no reason to suppose that the present low rate of 4 ■ per cent would continue if the market rate of interest remained substantially higher, but there were indications of a falling interest rate for all classes of securities. Mr. Leese suggested that the matter should be held in abeyance until the close of the present financial year. In commenting on the report, the Mayor, Mr. I. J. Goldstine, said that in j his opinion the boroughs that had already '.: changed their sinking fund commissioners on account of the reduced rate of interest had acted a little pricipitately. He agreed with Mr. Leese that the time was not opportune for a change. It was decided that the town clerk's suggestion should be adopted and that it be a recommendation to the incoming ] council next year to review the position. !