LOANS TO LOCAL BODIES.

Dominion, Volume 6, Issue 1608, 27 November 1912, Page 7

LOANS TO LOCAL BODIES.

i THE AMENDING, ACT.." (By Telesraph.—Press Association.),,,., Uargaville, November 2G.' What appears to be an extraordinary development in connection with loans to . local bodies has just been brought under ' notice. The Borough Council applied for an instalment of JECOOO on account of tho ;C20,000 loan which had been approved. The Advances.Office telegraphed that pay-... went had .been delayed in consequence of l> tho amending Act-0f'1912./.A'subsequent telegram from the Advances Office stated: "Amending Act requires all moneys paid after the passing of the Act to be at the rate at which they were raised, plus 2s. . 6d. per cent, per annum administration '' expenses. Cannot say at present what the rate will be. The Act also requires . a resolution by. the local authority pledg- ; ing it to pay the increased -rate. - Th« form of resolution has not yet" been gazetted. If. your council will-give an under*.; taking to pass a. resolution to pay the '.V increased rate and cancel the debentures already signed for the amount to be advanced, will authoriso payment of the .■ d£oooo on account." The money b'oing urgently required to pay for contracts in prepress, the Mayor, on behalf of the council, gave the' undertaking asked for. Tho council last night- : paswd a resolution protesting against the'/? unprecedented action of the Department:"' re the charge for._ 'administration ex-, penses,' and increasing the rate.of interest; also, requesting, tho Department, .t0,.,., strictly comply with the contract- entered- > . into between it and the council that the rate of interest be .£3 10s. per cent, per annum; with a sinking fund of ,£1 Gs. 6d., the loan to be repayable' in 361 years. The council condemned the alteration of tho terms on which the loan was agreed to by the ratepayers, and the action Vif the Department in over-riding the existing agreement and making the increased rate retrospective.

STATEMENT BY THE HON. JAS. . ALLEN. : When the foregoing message was submitted to the Hon. Jas. Allen last, even-' ing he said: "The.Dargaville .loaaiwas granted under the Act; the Act 6ays that borrowers have to pay the rate at which ■ we raiso the money. ,If Dargaville had taken the loan when it was granted—the whole of it—they would, have got, it. at, the rate then ruling. That is,:the old law made more explicit under the amending Act of last session. Every local body that has not yet got its money," the Minister added, "will have to pay just what we raise it at. We made no undertaking to lose money. We made an undertaking to'give Dargavillo a loan at the rate at which we can raise' the money,' and we will ,do so. So far as'therata of interest is concerned,' the amending Act of this year only enabled us to carry .out the, law as it stood before." The Minister quoted from the amending Act, which provides that local authorities shall have no action against the Superintendent of the Advances Department for breach -of contract. .It'also provides that the additional one-eighth per cent, for administration expenses shall apply to all loans or to any part thereof, to be paid to any local authority after the passing of-the Act,'whether an application had been finally grant-' ed or not. .

"I am very sorry that Dargaville is in the same unfortunate position that we_are in." the Minister remarked in conclusion. "We have to par more. - and we cannot help it. I: don't think they, grumble. Thev. are ..getting .money-, .as cheaply as the State.ean pet it for thein, aiid that is "only'a fair thing." .