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P.A. WELLINGTON, this day. Interest free money for public amenities was discussed at the New Zealand Counties' Association conference in Wellington yesterday, among the speakers being Mr. Leslie Lefeaux, former Governor of the Reserve Bank of New Zealand, who was present by invitation. No decision was reached, but the debate was continued this morning. The Waitemata County Council submitted a remit asking that the Minister of Finance, Mr. Nash, be requested to fulfil the promises expressed and implied in the Government's 1935 and subsequent policy by issuing all new credit money required for national purposes through the Reserve Bank, interest free at its source, to make such credit money available in loans to local bodies, at a nominal interest rate for carrying out approved public amenities; to avoid inflation the issue of such credit money to be correlated with the maintenance of a stable internal price level and an assurance of fulltime employment. This recommendation was much in line with' the recently enacted British Local Authorities' Bill making money available by the Treasury to local authorities at approximately the same interest rate that the Treasury paid. A Mangonui remit recommended that the association should study the [subject of interest free money as a means of providing finance for work I of national importance.

Mr. H. T. Gibson, chairman of the Waitemata County Council, said he belonged to no monetary reform association. He contended that local body interest-bearing indebtedness had reached the stage where it must hamper all future progress and development. Intolerable Burden An ever-increasing proportion of rates was required to meet interest and the burden on the ratepayers was one 'which should no longer be tolerated, and certainly not increased. With overdue maintenance to be overcome at greatly-increased costs, more county councils. were faced with large, and probably unprecedented, expenditure. Their competition on the money market would make investment money scarce and, possibly, dear. The Government could control the rate, but not compel lending, unless the rate were tempting.

Mr. Lefeaux, who was present by| invitation, said he was there to help delegates clarify their views.- His opinions were solely his own. There was no one in the world more free from affiliation or identification than himself. What the Waitemata County Council proposed was, without doubt, possible. It was also possible to walk on one's hands, but that was not necessarily a method of progress to be recommended. Safeguards which existed when the Reserve Bank was founded no longer existed, and there was no limit to the inflationary pro-' cess which could be indulged in. It could be done, but the consequences were inescapable. There would be an extension of trouble brought about by too free advances to the Government. The rate of interest was not really a material issue with capital works for local bodies. The money should first be borrowed from the people as a whole. If they started to spend without doing this, they would increase the number of "pieces of paper" in the hands of the people, without increasing the volume of consumer goods. There would be more money, but a stationary amount of consumer goods. By borrowing from the people for capital purposes, what went out was balanced by what came in from loans.

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Bibliographic details

LOCAL BODY LOANS, Auckland Star, Volume LXXVI, Issue 175, 26 July 1945

Word Count

LOCAL BODY LOANS Auckland Star, Volume LXXVI, Issue 175, 26 July 1945

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