Lack Of Loan Money Hampers Sewerage

Press, Volume CVI, Issue 31307, 1 March 1967, Page 1

Lack Of Loan Money Hampers Sewerage

A shortage of loan money and a fear that even less money will be reinvested when loans fall due led Mr F. R. Price, chairman of the Christchurch Drainage Board, last evening to warn subdividers and others that the board was not able to indicate when any new contract would be let.

The board, because of local support to its tap loans in the last few months, had been affected more slowly than North Island local authorities, Mr Price said, but as the local authority with the greatest loan programme in the South Island, the board was particularly susceptible to financial restrictions.

A credit in the land drainage loan account would permit some new work of that nature, but other than existing sewer contracts the board would be unable to proceed with further sewer works until the financial situation improved.

Reviewing progress, Mr Price said it was almost 15 years since the board’s district was extended to include the greater part of the metropolitan area. In that time the number of units connected to the sewer system had doubled, the mileage of sewers had increased by 73 per cent, a new system of main sewers had been developed, and a new main pumping station and , 21 additional permanent subsidiary stations had been built. An entirely new method of sewage disposal had also been installed. In the last 15 years projects

to meet the requirements of the expanding city had exceeded in cost and extent the works of the previous 75 years of the board's existence. £6m Debt This was reflected in loan indebtedness, Mr Price said. It had increased from £772,720 in 1952 to £6,165,350. The construction programme depended on three main factors, he said. The first was the capacity of the staff and from time to time consultants to undertake the necessary research, planning

and preparation of contracts. Next was the number of available contractors and their plant and labour. Third, was the finance available to the board, including the support given by the investing public and financial institutions. “All three factors have from time to time hindered the board, but the financial aspects have always provided the greatest difficulty, being completely beyond the control of the board,” he continued. “The board’s financial difficulties, in common with those of other local authorities, are brought about by the financial policy of the Government from time to time and any steps which might ameliorate the situation are beyond the board’s power.” There were loan redemp-

tions amounting to £700,590 falling due in 1967, Mr Price said. In normal times the board could expect up to 75 per cent of the amount to be reinvested; but the percentage fell last year to an average of 50 and only 25 per cent of the last loan was converted.

If this drop in the conversion rate was maintained, approximately £500,000 would have to be diverted from the construction programme to meet loan repayments. Special Attention It was not unreasonable to expect that the Government should give special and urgent attention to the problem of local bodies, Mr T. A. Tucker, the secretary, said. In announcing the Government’s decision to extend capital issues control to all finance companies, the Minister of Finance said that provision would be made for raising money to enable companies to meet repayments of maturing deposits or debentures raised before the regulations. “There is a strong feeling that interest rates for local body loans will be increased,” Mr G. A. G. Connal, chairman of the finance committee, said.

It seemed that the Government’s present loan requirements had been met, and it could be that next month the board would be in a much better position, he said. Local government was being hit harder than other sections—Government departments or universities Included —and unless there was some relief local government would be faced with putting off staff, something that would not need to be done by other sections he had mentioned, Mr D. P. McLellan said.