CABINET POLICY

Press, Volume XCVII, Issue 28629, 4 July 1958, Page 5

CABINET POLICY

Outline By Minister Government policy on the financing of licensing trusts was outlined by the Minister of Finance (Mr Nordmeyer) in a letter submitted yesterday during a sitting of the Christchurch Licensing Committee. j The committee was hearing; two applications for hotel licences j for Hornby—one. for a trust hotel ■ from the Paparua County Council; and a second, from Mr Frank Mitchell, a taxi proprietor. The Minister outlined foui points .which he said had been agreed upon by the Cabinet: Local licensing trusts are to be required to arrange permanent finance equivalent to two-thirds-of the value of the land and buildings, and to obtain the necessary consent of the Capital Issues Committee. Subject to the first point, and a reasonable scheme being submitted, the Government and the local authority concerned would guarantee the balance of the capital required, such finance to be by way of overdraft from the Rank of New Zealand, subject to j the consent of the bank and on approved terms for progressive. reduction of the guarantees. Overdrafts Where circumstances warrant short term guaranteed bank overdraft accommodation, up to a maximum of £lOOO may be ap-' proved to enable a trust to meet ore’iminary establishment expenses. The trusts to conserve their funds at least until a one-third margin is created out of profits As far as the Paparua County Council proposals were concerned he was prepared to accept the • following as permanent finance:— ; A first mortgage of £18.000; one ; third advanced or guaranteed by• the county council (any such guarantee or advance to be from a lender other than a trading banM. £16.600; bv debentures £P9OO; a total of £41,500.

He would prefer, said the Minister, (hat Ihe sum of £B3OO by bank overdraft should be guaranteed equally by the Government and the county council but this matter could be deferred for later decision. “You will note that the policy laid down by the Cabinet makes no provision for a Government guarantee in connexion with any ! borrowing other than by way of bank overdraft, and I would also emphasise that my approval to these financial proposals is permissive only,” said the Minister.! “It will be the responsibility j of both the county council and any licensing trust which is even-' tually formed at Hornby to obtain the independent consents which will be necessary from the Capital Issues Committee the Local Authorities Loans Board and the Bank of New Zealand.” '