Interest-Free Loans For Local Bodies Proposed

Press, Volume CII, Issue 30192, 25 July 1963, Page 8

Interest-Free Loans For Local Bodies Proposed

Money for essential local body works should be made available by the Government through the Reserve Bank interest-free with only an administrative charge, said Mr V. F. Cracknell, the leader of the New Zealand Social Credit League. The report of the Local Authorities Loans Board highlighted the major problem of local body finance in New Zealand when it re, • red to the necessity for lov .1 bodies to renew loans or td take new loan moneys, solely to meet the cost of servicing past loans, he said. “In many cases, the new terms are at higher rates of interest and the cost of servicing spirals. Rates are rising throughout the country, in some cases up to 50 per cent. By far the greater proportion pf these is being used to service debt,” said Mr Cracknell. The suggestion to introduce a poll tax only increased the scope for local body taxation There was a question of equity under the poll tax system as to how much the landowner should pay, he said. Money made available by the Government through the Reserve Bank did not mean that unrestricted funds would be available to local bodies, nor that they would receive much greater sums than at present. Such interest-free loans would still be controlled through the loans board and would be allocated according to their priority, said Mr Cracknell. Local bodies would pay only once for development projects. They would not be burdened with the present debt-servicing costs. Interestfree money would enable local bodies either to reduce their rates or to increase the amount of work done, he said “Already in various parts

of New Zealand there are examples of local bodies paying as much or more in debt servicing as they collect in rates. Obviously there is not the slightest opportunity for progress under such circumstances. Either they delay the evil day by taking up new loans and having to pay more interest or they fail to carry out the developmental work which is required,” said Mr Cracknell.