WHY A LOAN WAS REFUSED.

Press, Volume LXIX, Issue 20920, 29 July 1933, Page 10

WHY A LOAN WAS REFUSED.

OPINION OF MAYOR OF AUCKLAND. ! BOARD'S DECISION CRITICISED. I AUCKLAND, July 23. ; ■ "I believe, but I may be wrong. ', | that if the Local Government Loans I Board had been certain we could ' i not complete the formalities for our l proposed loan of £133,700 it may : have been approved, but the moment i the board found all arrangements ; had been completed the loan wac -• turned down." This statement was , made by the Mayor of Auckland, Mv ; G. W. Hutchison, at a special meeting of the Auckland City Council to-day when the loan proposals for ■ i urgent city works were discussed. ' j "To my mind it is a classical ex- ' I ample of bureaucratic control," said : Mr Hutchison, "particularly when ; you come to remember the constitu- ' lion of the board." The Mayor said . that in order that no time should be ; lost over the formalities, the city -. solicitor, Mr Stanton, accompanied i him to Wellington, and all arrange- ; ments had been completed in order , that the loan might be approved 1 under the special legislation which ; would expire on July 31. The Loans \ Board was informed that the money [ required was available, and that the i business could be completed before ' the expiry date of the legislation. The secretary of the Treasury was ; chairman of the board. In that \ position he did not want anybody I else to go on the market when the ■ Government required money. I Mr Hutchison said that of the five ' members of the board, three were departmental officers and two were 1 outsiders. It would therefore be seen i that Government departments had • control as far as the decisions were ; concerned. The board's decision re- ' vealed a most anomalous position in ' that a major portion of the works '. —storm water drainage in the city, and the Mount Hobson reservoir—--1 were the subject of an arrangement - made in December last with the Un- ' employment Board. The secretary I of the Unemployment Board sat as a member of the Loans Board, and was therefore a parly to the decision 1 making it impossible to carry out the ' arrangement made by. his own emt plovers. "Exceeded its Functions." ' The Mayor said he felt convinced • the instructions had come from the . Minister for Finance, and expressed : the opinion that the board had ex- - ceeded its functions in not granting - the loan. Special legislation had t been passed to help the unemployment position, and all local bodies - should be able to avail themselves - of the opportunity e.s -long as the ; act remained in force. It was not . the duty of the Loans Board to say i that the Auckland City Council or any other local body should not be [ allowed to proceed under the special i statute. ! About the portion sanctioned subject to a poll, the board had made a condition that the rate of interest was not to exceed 4 per cent., but ! a proviso" had been, added that if ? the council found it impossible to '. raise the money at that rate, applii cation could be made later to the ! board to increase it to 4.1 per cent., provided the loan was raised under I the instalment repayment principle. \ "I informed the board that money was not available at 4 per cent.," I said Mr Hutchison. "In view of j that I have no doubt the Loans Board will extend to us the privilege of , raising the money at the extra \ quarter per cent, when it k: found that the money cannot be raised at the interest specified." The Mayor moved that the council should proceed to take a poll to raise £116,000, the term to be 30 years, the loan to be repayable either by equal aggregate annual or half-yearly instalments of principal and interest over the term of the loan, or at the expiration of the term with a provision for a sinking fund of not less than 1 per cent, per annum, and a rate of interest to be not more than 4A per cent, per annum, and the security to be a special rate of 4-5 din the £. ■ The Mayor criticised the board's anxiety that ratepayers should be consulted. Protest after protest had been made against the board's decisions in imposing rates of 3 ; per cent, for sinking funds. Mr . Coates had recently stated that the Loans Board was in close co-opera--5 tion with the Government in regard ' to interest rates. That bore out ; what he had said in regard to the ; Loans Board. The resolution was carried. A further resolution was carried ' protesting against the Loans Board's i refusal of the loan, and appealing . to the ratepayers to vote for the ; loan when it is placed before them.