LOOAL BODIES SINKING FUNDS

Cromwell Argus, Volume XXVII, Issue 1374, 27 August 1895, Page 5

LOOAL BODIES SINKING FUNDS

INSTRUCTIVE REMARKS BY THE MEMBER FOR WAKATIPU. [FROM OUR WELLINGTON CORRESPONDENT.! One of the most useful speeches made during the financial debate came from a member who is endowed, as a rule, with the rare gift of silence. And when Mr Fraser, from far away Wakatipu, shed some fresh light on the tendency of our spendthrift Government to imperil the finance of Local Bodies, a feeling of surprise was manifest that a comparatively new member should have so good a grasp of the complications which surround these accounts. Mr very logically argued that if the principle Government had adopted of collaring the sinking funds of Local Bodies was a right one, so it would be to do the same thing with respect to the Sinking Funds of the Advances to Settlers Act, yet the Treasurer would not dare to suggest such a thing as that. Taking thiß very reasonable text for his speech Mr Fraser proceeded to show what Government had really done. By the Government Loans to Local Bodies Act of 1886, the Local Body pays 5 per cent, for 26 years and the debt is then extinguished. It was understood that the difference between 5 per cent, and the rate at which Government could borrow the money should be paid into a Sinking Fund account which would be supplemented by such annual contributions from ordinary revenue as would extinguish the debt in 26 years. The course of matters was as follows : Up to 1892 no S.P. Account was established, and the difference of interest was quietly pocketed. The Act of 1892 provided that the following amounts should be paid into the S.F. Account—viz., From ordinary revenue on all outstanding loans ... 1J per cent. From Land Assurance Fund ... ... hj P er cent « On March 31st, 1895, the state of these loans was— Direct Loans to Local Bodies... ... ~. £647,792 Loans to Land and Survey Department under 1892 Act ... ... 116,918 Paid into P.W. Account ; on account Roads and « Bridges Construction Act ... ... ... 89,800, ''' • J Vvw ! £854,510 Balance of debentures { on hand ... ; ... . : 290;; Total.of Loan ... .., £854,800 Tf no change were, affected, the following would be the accretions to S.F. Account for the ensuing year, on the basis of the figures of March 31st, 1895: From ordinary Revenue on £854,800 at 1$ per cent. ;..... ... £12,822 From Laud Assurance Fund on £854,800 at $ per cent .. , 4,274 From interest on Accumulated S.F. viz., , £64,454 at, say 4 per cent 2,578 £19,674 To be paid into S.F. Account, and being accretions to that Account. As direct loans to Local Bodies amount to £647,792, and, as this money does not cost Government more than 4 per cent., then 1 per cent, or £6477 is paid into ordinary revenue account and the net charge on the revenue is not £12,822 as above but that sum less £6477 or £6345. THE BUDGET PROPOSAL. The Treasurer proposes to apply the provisions of the Consolidated Stock Act, 1884, to the accretions of this S.F. Account.. Then he will issue debentures against the £19,674 above detailed and; absorb into ordinary revenue the following cash payments from outside sources — viz. :—• Cash from Local Bodies ... £6477 Cash from Land Revenue Fund 4274 Cash . from interest on aecrued.S.F 2578 £13,329 which is clearly a device to swell the revenue at the expense of the future, and certainly in direct opposition to the intention of the Act of 1892. What makes the proposal all the more inexcusable is that no future loan ought to cost Government more than 3J per cent; hence there would be a clear lij> per cent available for S.F. which, with the \ per cent, from Land Fund, would provide all that is necessary aud thus relieve ordinary revenue from any charge. Another aspect of the proposal is this :—Of the £854,800 there has been inscribed at once £449,000: if the balance L 405,800 be inscribed at once, the accrued S.F.—viz., L 64,454 would be realised and the whole of it paid into the Public Works Fund. Was this intended by the Act of 1892 1 And this is where the comparison drawn between the Sinking Funds of the Loans to Local Bodies and the Advances to Settlers Act comes in. If Mr Ward can take the one, why not the other. The real meaning of his proposal was to swell the revenue and destroy the Sinking Fund. The matter does not reaily affect the Local Bodies as such, but taxpayers Bhould understand that a part of the revenue is really borrowed money. Such was the tenor of Mr Fraser's speech, and as the County Council Conference was sitting in Wellington at the time his facts and figures came as a revelation to them, and as their conference will end in nothing for want of the Local Government Bill which the Premier refuses to give them, the country people will perhaps discount Ministers' promises in future.