LOCAL LOANS.

Press, Volume LXVIII, Issue 20625, 15 August 1932, Page 8

LOCAL LOANS.

CONTROL BY BOARD.

FIVE YEARS* FIGURES.

REVIEW BY MINISTER

[THE rEBSS Special Serrlct.]

WELLINGTON, August 13,

An interesting review of the operations of the Local Government Loans Board since it commenced to function on April Ist, 1927, was made by the Acting-Minister for Finance (tho lit. Hon. G. W. Forbes) to-day. Mr Forbes showed that during the ' five years ended March 31st last local bodies had sought authority to raise loans totalling £22,115,205 6s 2d. Of these, £13,100,029 2s Id had been approved by way of new loans and £6,148,603 15s lid by way of renewal loans, while applications involving a further £3,053,382 8s 2d had been declined or referred back. The following table summarises the Board's activities during the five-year period, shillings and pence being orojttod as a matter of convenience:— Applications Sanctioned. New Hen ßwa l" £ A £ 1027-28 .. 4,606,649 3,312,185 1,048.796 1928-2'J .. 0,007,015 3,866,651 800.2*21 1829-80 .. 4,218,731 3,568,842 967,875 1930-31 .- 3,840,505 1,766,251) 838,901 1931-32 .. 3,412,363 781,105 2,483,810 £2-2,115,295 ±'13,190,020 £6,148,603 The value of loans referred back or deferred was:— £ 1937-38 861,624 1098-29 ... .. .. 631,031 1929-30 .. .. ~ 464,329 1930-31 .. .. ... 1,272,318 3931-32 .. .. .. 424,080 £3,053,882 Reconstruction Loans. "It will be noticed," said the Minister, "that since the first year there has been a substantial reduction in the amount of new loans sanctioned. The figures for the last yev.f would have shown a greater reduction had it not been for the earthquake in the Hawke's Bay district. The loans sanctioned for reconstruction of local body services in this area totalled £253,900. The amount of the renowal loans varies according to the loans maturing each year. "Under the Local Government Loans Board Act it is provided that the Loans Board shall not decline to sanction a renewal loan. The new loans sanctioned, however, cannot be accepted as an indication of the amounts actually borrowed, as many loans may be rejected at a poll of • ratepayers or may not be proceeded with for other reasons." Increased Indebtedness. The following statement shows the loans raised from 1924 to 1931 inclusive; also the annual increase in the total local body debt for the same period. Owing to a number of loans maturing each year and being partly or fully redeemed, the actual increase in debt is considerably less than the loans raised.

Loans raised. Increase in debt. £ £ 3924-96 .. 1926-26 .. 0,163,062 6,066,288 law-':? .. 6,623,617 4,503,493 1927-28 .. 6,107,647 9,391,935 1926-29 .. 3,801.764 2,890,447 1929-30 ~ 4,013,625 1,910.630 1980-31 .. 8,299,236 1,478,497 1931-89 ... 2,615,407 Not known yet Sinking Fund Provision.

"An important feature of the lioans Board's operations,", said Mr Forbes, "is tho fixing of tho rate of sinking fund to be set aside for the repayment of loans. Section 6 of the Local Government Loans Board Act, 1936, provides that the Board shall not sanction a loan unless provision to its satisfaction is made by the local authority for repayment within Biich period as the Board deems reasonable, having regard to the probable duration and continuing utility of the works on which the loan is proposed to be expended. The following tables taken from figures published in the Local Authorities Handbook indicate how the adoption of the principle outlined has affected tho accumulated sinking funds and the annual payments thereto. Treasury inscribed loans are omitted, also State Advances loans, as these aro extinguished by repayments during their currency. Accumulated Loans sinking fund, outstanding PerconMarch 31st. Amount, tage to Year. £ £ loans. 1924 .. 39,110,000 4,484,586 11.40 1925 .. 45,720,794 4,950,267 10.82 192 C.. 51,726,897 5,697,348 11.01 1927 .. 56,412,759 6,305,295 11.17 1928 .. 58,949,028 7,136,057 12.10 1929 .. 62,003,786 8,031,094 12.95 1930 .. 64,052,021 8,413,055 13.1S 1931 .. 05,692,606 9,323,461 14.10 Annual Payments to Sinking Fund. Rate per centum Amount. on loans. £ £ s. d. 1924 . - • • 413,369 1 1 a 1925 .. .. 523,870 1 211 1926 .. .. 580,200 12 5 1927 .. .. 628,750 12 8 1928 .. .. 675,510 1 211 1929 .. .. 725,547 13 5 1930 .. .. 789,821 14 8 1931 .. .. 866,646 16 5 "The higher rates of sinking funds imposed by the Local Government Loans Board aro reflected in tho increase in the percentage of accumulated sinking funds and in the percentage of annual contributions, It is of special interest tp note that the sinking fund contributions for 1930-31 were in excess of the amount of new loans sanctioned by the Loans Board during the year ended March 31st, J932."