The Press TUESDAY. MARCH 27, 1956. Local Government Loans Board

Press, Volume XCIII, Issue 27928, 27 March 1956, Page 12

The Press TUESDAY. MARCH 27, 1956. Local Government Loans Board

Though the Minister of Finance (Mr Watts) rejected the request of the Municipal Association for changes in ■ the powers and the constitution of ' the Local Government Loans Board, i he has replied very reasonably. The legislative provision that the board , “ may have regard to the interests “ of the national economy ” is new, but its principle was implicit in the ! original act of 1926. It was evidently • thought desirable to have it explicitly stated, because local body I borrowing has recently involved 'new questions of priority. The act i was first passed because local bodies ' were generally borrowing too freely,

and borrowing abroad too freely, for the stability of the national economy. The Local Government ; Loans Board was accordingly established in 1926 to ensure that only sound projects were financed by loan and that adequate arrangements were made for paying off loans within the life of the assets they had created. In the first 25 years of the board’s work its insistence on these conditions sufficed to keep borrowing to a reasonable level. In the last few years heavy demands by private business, local bodies, and the national government for development capital have restricted funds available to local bodies; there is just not enough money saved in New Zealand to provide loans for all desirable local works. Unless something was done to determine priorities the most essential programmes might languish and the least necessary be financed. Obviously this was merely another side of the work the board was already doing; and no other authority had the background of experience to take it over. To deprive the board of this function would not do anything to meet the present shortage of money for local loans.

The request of the Municipal Association for direct representation on the Local Qovernment Loans Board seemed, on the face of it, more reasonable. But the board has often to make unpopular decisions, perhaps deferring an expensive work on which influential local authorities are determined, so that several more important though smaller and less spectacular jobs can be done elsewhere. A direct representative of any group of local, authorities would find himself in an invidious position; and, if municipal authorities had direct representation, counties, harbour boards, hospital boards, power boards, and drainage boards would also have to be represented. Although the present constitution of the board, with two official members and five others holding office in effect, during the pleasure of the Minister of Finance, is not ideal, it has given general satisfaction for 30 years. A change to direct representation would not be an improvement. Some other arrangement, with a fixed term for members, may become desirable in view of the new problems faced by the board. Mr Watts is right in wishing to retain the board as an independent authority, subject only to general government policy; and, as long as the board continues to give as good a service as it has done over the years and does not become subservient to the Treasury, the need for amending its constitution is not great. So far the Municipal Association has not shown that the board has unduly restricted the enterprise of local authorities.