BORROWING POWERS OF LOCAL BODIES

Press, Volume CI, Issue 29989, 26 November 1962, Page 12

BORROWING POWERS OF LOCAL BODIES

In the “good old days" of English administration, before the reformation of local body government in 1835. public money and property were blatantly divided among local authority members and large sums spent on feasting and on the salaries of numerous friends and relatives who filled unnecessary offices, said Mr A £ Hurley, legal adviser to the Municipal Association He was speaking on "’the borrowing powers and responsibilities of local body members,’’ at the seminar on the rights and responsibilities of local authority members. These days every local body was tightly bound by statutes and members laid themselves open to substantial fines and debts if they undertook actions not specifically authorised by statute or that were not obvious intendments of statutes

Councillors and board members could be acting in good faith, for the good of the community and for no personal gain, and still face grave charges for the misappropriation of funds because they did not take steps to ensure their proposal was within the restrictions impost by law. Mr Hurley said Virtually all bodies were dependent on borrowing although limits and means imposed on various organisations differed. In 1950 the net loal body debt in New Zealand was £ 48,500,000. a <tebt of £29 128 for every

person in the land. Ten years later the debt was £136,500,000. equivalent to a debt of £6O Ils for every new Zealander. Mr Hurley said.

Boards and councils could not be criticised for the increase in borrowing. It had been caused largely by the necessity to provide facilities for a rapidly growing urban population. Boards such as harbour boards were governed by their own statutes, but the borrowing powers of most were controlled by the Local Bodies’ Loans Act. 1956. he said.

Local authorities were not permitted to borrow by bank overdraft a sum more than three-quarters of the preceding year’s revenue, and at the end of a year could not have a debt exceeding unpaid rate* and other outstanding debts owing to the authority. Accounts were assessed annually by the Audit Office, he said. Exceptions to the limits mentioned were amounts needed to deal with disasters and bqßrowing for capital works. Special loan conditions applied to capital works projects which had. however, to be approved by the majority of ratepayers. Polls were required in some cases. If ratepayers were against the project then permission granted by the loans board to borrow money lapsed, said Mr Hurley. In eases of unauthorised

borrowing, every board member or councillor who voted for the action, or who abstained. was liable to prosecution and a fine of up to £lOO Where money was misappropriated, not necessarily dishonestly, members could be fined and also subjected to a surcharge, making them debtors to the Crown for the amount misused, or part of it