Sinking Funds.

Press, Volume LXVI, Issue 20027, 8 September 1930, Page 10

Sinking Funds.

The rejectio. by the Legislative Council of the City of Christchurch Sinking Fund Commissioners Empowering Bill was unexpected after tho passage of tLe measure through the Lower House, and was due, we are now told,, to the opposition of the Minister for Finance (acting' of course on the advice of Treasury officials). The Bill was intended to give to the Christchurch City Council Sinking Fund Commissioners rather important»special powers relating to the anticipation of revenue for certain defined purposes connected with the investment and operation of the Fund. The Commissioners were to be authorised to borrow money temporarily, either on mortgage on the security of their assets or by taking money on deposit, up to an amount not exceeding the total income earned by the Commissioners in respect of all funds invested by them during the preceding financial year. The specified purposes for which they night borrow were (1) to enable them, in anticipation of their income; to take up an investment or investments which they might consider it desirable to take up although they might not at the time h*v« sufficient moneys in hand; (2) to

enable them to repay the whole or any part of such moneys so borrowed (with interest); (3) to enable them, oil the principal of any loan ,to the local authority becoming payable, to repay it without realising on securities. These powers, if exercised with restraint by skilled and experienced Commissioners, would undoubtedly be of value in improving the earning capacity of the Sinking Ftmd, but they involve a departure from the well-established principle that a sinking fund should be operated strictly with its own money. The Treasury no doubt felt that if the special powers were granted to tho Christchurch Commissioners they could not be refused to the Commissioners of oi her local authorities in' New Zealand, and it is easy to imagine circumstances in which the exercise of such powers might be disadvantageous to the Fund it§elf. Besides no one has forgotten the condition of the finances of many local bodies prior to the passing of the Antecedent Liability Act of 1922.