“Government’s Own Doing”

Press, Volume CX, Issue 32213, 4 February 1970, Page 34

“Government’s Own Doing”

• (N.Z. Press Association) ROTORUA, Feb. 3. The fact that the New Zealand loan market was in the worst condition for years was the Government’s own doing, the Mayor of Rotorua (Mr A. M. Linton) former president of the NewZealand Municipal Association, said today.

“We have been predicting thL. to the Government for years and they haven’t listened,” said Mr Linton. Mr Linton gave two reasons for the Government being at fault. He said the Government had:

Not allowed a higher maximum for local body loans. Failed to recognise the need for setting up of a local body finance corporation. “Unfortunately, local body investment is the worst in the country,” said Mr Linton. “The Government fixes the interest rate and the margin between the interest on Government loans and local body loans is not sufficient to even put them in front of Government loans on net realisation.

“The net return to the investor is lower than for any other loan.” The state of the internal loan market was very much a short-term matter, the Ministerd of Finance (Mr Muldoon), said in Wellington today, the Press Association reports.

Mr Muldoon said: “The past three months have seen a combination of the effects of! the elections and the holiday period.

“In the longer term' the Government's policy will ensure that the reasonable needs of local bodies are met as they have been in the past." The usual summary of local body requirements made at this time of the year had not been completed, so that it was not possible to indicate the pressure on funds likely during the next year. The call for restraint, referred to in the funds letter, was made by the Minister nearly a year ago. Commenting on the criticism by Mr Linton, the Minister said that both the fund; and Government policy generally ensured that local bodies had been under no more restraint than any other sector of the economy. A local body finance corporation would not assist the [situation, as it would simply be taking the same pool of [funds as was available at present

To some extent it would be a retrograde step as it would reduce the degree of flexibility that was at present available, Mr Muldoon said.