FOR A RAINY-DAY. HARBOUR BOARD FINANCE.

Evening Post, Volume LXXXI, Issue 92, 20 April 1911, Page 3

FOR A RAINY-DAY. HARBOUR BOARD FINANCE.

A- SPECIAL . FUND. IX THE EVENT OF A "LEAN" YEAR. The subject' of finance wae discussed aL> some length- by the Harbour Board at its meeting last night. In accordance with notice the chairman (Mr. R. Fletcher) moved the following motion :—: — "(1) That . a special fund be established in connection with the board's finances. (2) That the sum of £3108, being one half of tho surplus shown in the profit and loss statement for the year ended 30th September, 1910. Pius a sum "equivalent to six months' interest on the above amount, be set aside a« a nucleus ' of such special fund to provide- for (he contingencies mentioned in section 172, subsection 1, of the Harbour* Act, 1908. (3) That such moneys shall be invested in the name of 'the board in such securities as tho board shall from time to time approve. (4) That when a eurplus occurs in any yoar not less than 50 per cent, of such fiurpiue 6hall be placed to the credit of the special fund."' Mr. Fletcher said his idea was to avoid the necessity of the experience they had a year or so ago. If they could put part of their surplus into a "special fund it- would be a very good thing, and be the nucleus of a fund to draw on. in the event of a 'lean" year arriving. If such a- fund existed they would not have to alter the tariff a« they had to do last year. His proposal practically mea-nt providing for .a 'Tainy day." At the end of last year the board had a profit of £6000, and his motion provided that in such a case £3000 would be put into a. special fund. There was no provision in the Harbours Act for a Reserve Fund, but there was provision for a Special Fund, aud he proposed to call thie a Special Fund. Another advantage would be that they could inveat it to the beet advantage, on the same lines as the Sinking Fund Commissioners invested money placed in their hands. In' hie opinion, the proposition was a sound one. Nothing would do more harm to the reputation of the board than frequent alteration of changes consequent on a shrinkage in exports or imports, and therefore h© commended tho proposal to the board's favourable consideration. He thought it was a proper art! wise thing to do. Mr. F. G. Bolt on seconded the motion. A COUNTRY CRITIC. Mr. C. E. Daniell said he gathered that this would be the third sinking fund established by the board. At the present rate the board's sinking funds were aggregating to such an extent that ite present liabilities would be wiped out in 25 to 30 years, and there would be nothing for their successors to pay for. The chairman: I am afraid that is rather a sanguine wow. What about new works? Mr. Daniell contended that any surplus made should b© allowed to accumulate in the ordinary, way. The fact that the board had a surplus this year did not mean that it would not wont it next year. It was necessary tiia-t any surplus f unde should be easily /accessible to meet the requirements of the day. He thought the finances of the board were so sound that they did not need to build up a third sinking fund. The proposals of the chairman, he urged, were not justified by the existing state of, af- \ fairs. They should' seek to reduce the charges instead of piling :~p an asset for future generations IS IT NECESSARY? I Mr. M'Ewec.' (Petone) asked if it was | wise for the board to inaugurate a new policy on the eve of going out of office. He submitted that it was unwise,. He thought the matter should ,be left to the new' board. How, lie asked, could they bind their ttucceesota to carry out the terms of the resolution. It was open to their .successors to do what they liked with the surplus. He thought the whole question should be gone into in connection with a revaluation of the whole of the "board's property. .He regretted that he 'could' not. support the motion. , HOSTILE CRITICISM. Mr. M. Cohen (Palmerston, North). also opposed the motion, which, in. his opinion, opened up the .whole question of the board's accountancy. It appeared to him that . tho present Bystem of accountancy was misleading. The maintenance and repairs account in every department should be - kept separate and distinct, and should be made a charge — even a . first charge— on the revenue of the board. Before going into this < matter 'the, whole question of accountancy should be gone into, with the object of seeing, whether the end aimed at could not be achieved in many different ways. The "board had no right to make profits. It had a right to see thatisuch reasonable expenditure as was outlined at the- commencement of the year, was met by the revenue, but .it was not entitled to make' thousands of pounds profit. He did riot suggeat that they had done anything they should not have done, but they, had fouud, according to the figures in the balance-sheet, Boinething like £45.000 of revenue over expenditure. .He was. not -satisfied, in spite of what 'experts said upon the point, that -they were dealing with this depreciation question properly. The figures showed ;that in twenty-seven years 'they had accumulated a sum of £270,000 by way of 'depreciation. That had been .expended upon -the board's works; but what ought io have been done was this": As .the works on which the money was expended had been constructed practically out of revenue, and ought to have been expended out of loan, they ought to have credited tho depreciation fund with the same interest as they would have paid on monejs raised by way of loan to carry out these works. OTHER SPEAKERS. Mr. C. W. Jones said he believed the custom had been to put a suiplus into the general fund, and it had thus prevented their drawing upon loan money. Under the proposals of the chairman the surplus would have to be «.t short call. The chairman : Twelve month*. Mr. Jones urged ..hat it would becheaper lo use the money than t-> invest it at a rate of interest. k"=e than the rate they would li.ive to p:iy for loan money. He would piefer that the mallei .should be pc*tp> ned. Air. H. C. Te\\i»le\ jup ported the motion, which he thought .simply meant that they should eaimark a certain amount ot' the pro/its I'o-r tpecinc contingencies. That appeared to him to be a Kood policy. They could always i educe the charge* if they found the profits were too large, and they could, on the other hand, draw on the fund in case of a shortage. Mr. HUdreth also supported the motion. Any movement which would obviate the" necessity of altering the port charges should bo rsupporled. and he regarded this as a step in that direction. Mr. Bolton said that any future board could rescind the motion if it found it unworkable or unnecessary. lt» seemed to him that the locking-up of the' surplub in the way proposed wae- niore prudent finance than keepinp: it as paurt of the general fund. He, thought, h«

added, that the amount written off for depreciation was fair and reasonable ; if anything, it erred on the side of liberaiitv. was ulso good finance to keep such as&et-s liquid and eaa-ily realisable, even if they did have to pay a little more for loan money. The chairman, in replying, said the board was better able to make a policy than a new body that might come in. Besides, any act "of this board could be altered by' the incoming body if it thought it desirable. He considered the amount written off for depreciation should be increased from Z>% per cent, to 5 per cent. He agreed with Mr. Cohen that the board should pot make larg-o profits, but he did think that, considering the enormous amount of work done. a. profit of £6000 was not excessive. He hop^d that if he came back to- the board he would before the end of tho year be able to 6uggest a reduction of the charges. The motion was then put and earned.