CITY COUNCIL, THE GAS QUESTION.

Evening Post, Volume XIV, Issue 49, 26 August 1876, Page 2

CITY COUNCIL, THE GAS QUESTION.

A special meeting of the City Council was held yesterday afternoon to consider the report of the Special Gas Committee. Present— the Mayor (in the chair), Councillors Mills, Moss, Gillon, Cleland, Dransfield, Ramie, and Greenfield. Councillors Pharazyn and George, being respectively the Chairman and Manager of the Gas Company, did not take part in the discussion. A BREACH OP CONFIDENCE. Bofore the regular business was opened, Councillor Mos9 wished to direct the Council's attention to the fact that one councillor frequently took advantage of his acquaintance as such with private matters of the Corporation by publishing them in a paper with which he was connected, before they would have been made public in the ordinary course by being brought officially before the Council. He referred particularly to the publication in one of the Wellington papers of the terms offered by the Gas Company to the Special Committee, which certainly ought not to have been made public until duly reported by that committeo to the Council. He thought this extremely unfair to the other papers, apart from the question whether it were not a breach of confidence towards the Council, and if it were to continue he should move that committee meetings should be open to the press. Councillor Gillon understanding himself to be referred to, stated that as the directors of the Gas Company were present at the meeting, and could have published the whole affair had they chosen, he did not regard it as a private meeting. THE COMMITTEE'S REPORT. The Gas Committee reported as follows : — " Your committee have to report that in accordance with resolution of Council passed at the ordinary meeting held on the 17th instant, they have re-opened negotiations with the directors of the Gas Company, with the following result, viz., that the directors are willing to recommend a sale to the Corporation of the works, &c, at the rate of £14 10s per share, reckoning 2700 shares. Your committee are of opinion that £14 per share would be a fair price, and advise that the works, &c., be purchased at that rate should such price be agreed to." Councillor Gillon moved the adoption of the committee's report. Councillor Mills seconded the motion, deeming it desirable that the Council should have charge of lighting the city. He regarded the threatened competition of two gas companies as a waste of capital, and as a probable inconvenience to the public, which most likely would result in an amalgamation, producing a more oppressive monopoly than ever. Councillor Greenfield did not see the force of the argument he had heard used, that the question should be submitted to the ratepayers, for the Councillors had been elected to do their best for the ratepayers, and if the Council decided it would be well to purchase the gas works, that conclusion ought to be accepted. He supported the report, for he regarded the probable benefits of competition between two companies as very transitory. One ultimately must give way, and then the victorious company would charge high rates to make up for past losses. He thought it better for the Corporation to step in now, and secure a permanent supply of good and cheap gas. The threatened competition of a new company already had caused the gas directors to reduce their demand. Councillor Moss supported the motion on similar grounds, but thought the Council ought to make sure that it would be able to supply gas at a cheap rate, and pay the interest on the purchase money without having a deficiency to come out of the general funds. The purchase ought not to be made unless the Council could offer the same advantages as those definitely promised by the new company. Councillor Cleland opposed the report, deeming the price too high. He thought £12 10s quite enough to give for £10 shares. Practical men had considered the cost of the company's plant much too high, and he did not see why the Council should pay not only the extra cost incurred through the company's mistakes, but also an advance of 25 or 30 per cent on that excessive cost. The matter ought to be referred to the ratepayers. Councillor Ramie supported the report on the same grounds as previous speakers, and did not see the necessity of going to the ratepayers. The Council already was elected to do its best for them. The Mayok opposed the adoption of the report, considering the price too high, and believing that cheap gas would not result from the proposed purchase. The total cost of the gas works, at the price per share named, would be £37,800, which, with various incidental expenses, would be, in round numbers, fully £40,000. Now the new gas company had estimated the cost of new works at £16,907, and that estimate had not been impugned. Even if they set it down at £20,000, which allowed a considerable margin, this was only half the sum asked by the Wellington Gas Company. He, therefore, submitted that the property offered them for £40,000 was not worth that sum, because they could erect new works at half the cost. It had been urged that the Council had no power to erect gas works, and that the House of Representatives, in which the gas element was very strong, would strike out the empowering clause in the Municipal Corporations Act; he hoped, however, that the House would not be persuaded to prevent municipalities controlling injurious monopolies. It was very necessary that there should be some control of such monopolists as failed to perceive that special privileges involved special duties. He thought the Wellington Gas Company should have been content with smaller profits, and earned their service pipes further, without waiting to do so until an opposition company was started. It was only since that time that gas had been laid on to the Terrace, and the prices lowered. He objected also to the limited time within which the lower prices would be charged, as unfair to the poorer classes. The Company's last annual balance sheet showed a profit of £3436. Now supposing the Corporation purchased the works and made the same profit, out of that sum would have to come £2800 interest on £40,000 at 7 per cent, leaving only £636 for sinking fund and depreciation. Moreover, this profit was with gas at 14s. If they reduced the price to 10s, more than the whole of the above profit would be swallowed up. They had been told that new works could not be completed in less than two years, but he would undertake to say that they could be ready by this time next year. Again, they had no knowledge whatever of the state of the property proposed to be purchased at such a high price. Before entering into any agreement, they ought to have a report from a competent person on the condition and present value of the plant. He did not think it the Council's duty to relieve the Gas Company of their responsibilities in the face of a threatened opposition, and he did not see how the Council could take into consideration the sums for which shares might happen to have been sold or bought, whether £16 or £19. All they had to look after was the interest of the ratepayers. Councillor Dransfield remarked that the new Empire Gas Company already had caused the Wellington Gas Company to reduce their selling price from £18 13s 4d to £14 10s per share, and the price of gas to 12s. He thought gas should be as cheap here as in Auckland and elsewhere. He doubted the pecuracy of the new company's estimates. The Council had had a lesson against trusting such paper estimates. When the waterworks were started, £25,000 was borrowed as the outside sura they required ; but they soon needed another £25,000 and now, after spending £50,000 instead ot £25,000, they wanted some £25,000 or £30,000 more to complete the work. There was no guarantee that the new company would not make the same mistake as the old one. He thought a public meeting was not the place to discuss questions involving figures, which could be dealt with better by smch a body as the Council. He advocated striking while the iron was hot, as the old company no doubt would soon recover from their present alarm at the threatened opposition. He contended that the Corporation could supply gas at 10s, for — Ist, the cost of production decreased in proportion to the quantity produced. Thus, while the 13,000,000 ft. produced last year cost 8s per 1000 ft., and the 16.000,000 estimated to be produced this year would cost 7s 3d, the 20,000,000 expected to be manufactured next year could be produced at 6s 6d. 2nd. He disputed the Mayor's estimate of the rate of interest, which, from conversation with their banker, he believed would be only 5 per cent, instead of 7. If so, the annual charge would be only £2000. The Council, of course,, would not aim at making a profit, or supplementing other revenue from this source. He supported the motion believing that the Corporation could supply gas at 10s, and also have the town well lighted. The Mayor stated that he had received a requisition (signed by fifty ratepayers) to call a public meeting, in order that the question might be considered. The mover having replied, the question was put and carried, Councillors Mills, Moss,

Gillon,- Dransfield, Rainip, and Greenfield voting for the adoption of the report, and the Mayor and Councillor Cleland opposing it. The Council then adjourned.