City Sinking Funds.

Press, Volume LXVI, Issue 20037, 19 September 1930, Page 10

City Sinking Funds.

A statement printed in The Press yesterday explained the reasons why the Christchurch Sinking Fund Commissioners desire .special legislation, empowering them to borrow in anticipation of revenue, in order to make investment more remunerative to the Fund. It is difficult to resist the impression it conveys that the Fund is in need of stronger finance to fulfil its obligations in meeting maturing loans; and if that is bo, the sounder course for the Council.and the Commissioners to follow would be to seek special legislation increasing the Sinking Fund contributions, rather than special legislation giving the Commissioners power to traffic in interest rates and to employ loan money at call in making long-tern-advances, subject to the risks of that class of business. If, on the other hand, the present contributions are sufficient to support the Commissioners' functions) which, as the statement, puts it, are " merely to invest moneys and "repay the loans, when due, out of "accumulations," then it seems that the special powers sought are really not necessary. As we have said before, the powers contained in the Enabling Bill, which was rejected by the Legislative Council because of objections raised by the Minister for Finance, on the advice of Treasury officials, would undoubtedly improve the earning capacity of the Sinking Fund, if exercised with restraint by skilled and experienced Commissioners. The powers proposed, however, lent themselves to much wider use than Was intended by the present Commissioners; and there was no guarantee that their prudent policy would be upheld by their successors, or by the Commissioners of other local authorities, once granted similar powers. Such, obviously, was the danger that the Treasury officials apprehended from tb« powers sought; and perhaps it would have been better had the framers of the rejected Enabling Bill contented themselves with something much less than what they applied for. For example, to anticipate a limited percentage of Income in order to facilitate investment in well-defined circumstances and conditions, would be less objectionable than to anticipate, by borrowing, n whole year's income—which in the caw of the Christchurch Sinking Fund would amount at present to approximately £20,000 —to enable invest?jnenta to be made aodner or partly to

pbviate the realising of securities to repay maturing loans. In the latter case, Sinking Fund Commissioners have years of notice of the date when the money is wanted, and are naturally expected to arrange their investments accordingly.