ANTECEDENT LIABILITY

Evening Post, Volume CVI, Issue 33, 8 August 1923, Page 12

ANTECEDENT LIABILITY

LOCAL BODIES LEGISLATION

EFFECTS OF THE ACT.

The practical effect of the provisions in the Local Bodies' Finance Act, which require local bodies to liquidate their antecedent liability and keep their expenditure within certain limits, are referred to in the annual report of the Department of Internal Affairs. When ( the Act was passed there was considerable concern over the drastic provisions contained in the Bill, but, according to the report, the'^legislation is working smoothly.

Instances of hardship were revealed, but these were met either by arrangement, or, where necessary, by legislation. Despite adverse criticism from a few quarters, it was now generally admitted that the Act was working'well, and would materially strengthen tho financial' position of local bodies. An impression was current- that the Act was harsh, in that if a flood, for example, came and necessitated expenditure by a local body, causing jt to exceed its estimated expenditure, then the local body would require to ceaso its ordinary operations for a period. This however was not the case. The Act aimed at keeping expenditure by local bodies within the limits of their income in each year, but emergency was provided for by section 7, which empowered the Minister to authorise a local body to borrow money by overdraft, or other such means, in special casi-s of flood, earthquake, fire, or other accident. Moneys borrowed for such purposes were an addition to the usual borrowing powers authorised by the Act, and were dealt with as an antecedent liability of the local body. Such moneys might be extinguished in any of the ways provided m the Act—i.e., out of revenue, by direct loan (without a poll of ratepayers) or by special rate. ' In accordance with the provisions of the Act every local body having an antecedent liability gave notice of tinamount thereof and the means to.bo taken to extinguish it. The total amount of antecedent liability in respect of all local bodies was £2,328,585 Is Id. This amount was to be extinguished, or had been extinguished, as follows • (a) By direct loan, £1,471,777 12s lid; (b) by debentures,' £26,815 9s sd; (c) out of revenue, £144,737 6s 3d; (d) by special rate, £388,256 14s 7d; (c) method not decided, £296,997 17s lid. In addition to this the Minister exercised the powers given under sub-section (5) of section 3 of the Act, and authorised twenty-three local bodies during their first year of existence to borrow amounts totalling £43,910, whiist three local bodies avail-' ed themselves of the provisions of the section covering emergency expenditure.