THE HOSPITAL

Evening Post, Volume CVI, Issue 124, 22 November 1923, Page 7

THE HOSPITAL

FINANCIAL PROVISION FOR

EXTENSIONS

STATEMENT BY THE CHAIRMAN.

At a meeting of the Wellington Hospital Board this afternoon, an important statement was made by the chairman (Mr. F. Castle) with reference to the provision of finance for the proposed new Hospital buildings, and also as to the levies and subsidies for the coming year.

"At our last meeting," remarked the chairman, "authority was given the Finance Committee to proceed with the issue of debentures to the extent of £50,000 at 5£ per cent, interest. The committee therefore made application to the Government for authority to borrow money in this way, and submitted a proposal that £50,000 should be raised and repaid, if necessary, in ten years by: (a) Establishing a sinking fund to provide £25,000 at the end of ten years; and (b) making a second issue of debentures for £25,000, to be paid off in ten years by continuing the same annual sinking fund provision. "The reply of the Director-General of Health, received 10th November, conveyed the Hon. the Minister's consent to the board's application, provided, however, the £50,000 was wholly liquidated in ten years. The Department suggested that the term would be too short for subsequent loans. "Under the circumstances, an interview was desired with the Minister of Public Health, and a request made for authority to issue the debentures as desired by the board. By invitation, the Mayor of Wellington, Mr. R. A. Wright, attended, as the matter is of considerable interest and importance to the Wellington City Corporation. The committee advanced the very obvious argument that straight-out ten years' loans would unduly increase the annual levies and subsidy owing to heavy sinking fund provision that would be necessary. The Mayor supported this, and favoured longer term loans than was proposed by the board. The Minister said he would consider the matter -with the Minister of Finance, and authority has since been received to raise the money in the way suggested by the board, viz., by two ten-year periods. "A comparison of the annual cost of £50,000 for 'ten years and two ten-year periods is shown:—Ten-year loan of £50,000, at 5£ per cent.: Interest, £2750; sinking fund, £3975: total, £6725.-

"Annual cost of £50,000, at 5£ per cent., to be repaid in twenty years, as proposed by the board:—First ten-year period: Interest, £2760; sinking fund, £1987; total, £4737. Second ten-year period: Interest, £1375; sinking fund, £1987; total, £3352. "It will be seen, therefore," added the chairman, "that if the board's pro-1 posals did not require more than £50,000 a straight-out ten-year loan could be faced, but as the board will require to raise at least £150,000 during the I next three years, and possibly more a few years later, longer-period loans are necessary and more equitable. LEVIES AND SUBSIDIES. "Influence of increased capital expenditure on levies and subsidies: The net expenditure for the current year is £78,687, of which £44,057 is being paid by levies, and the balance, £34,629, by Government subsidy, the rate of subsidy being 15s 3d per £1. "Owing to legislation passed this year, a much higher rate of subsidy will be payable to the Wellington Hospital Board next financial year. It will be iv the vicinity of 21a per £1. On this account there should be no increase in the levies for next year, 1924-25, but if £150,000 is raised during the nest three years, as proposed, the amounts required by way of levies and subsidies have been roughly calculated as follows :—1924-25, net expenditure, £85,----38 5; levieß, £40,558; subsidy, £44,827. 1925-26, net expenditure, £92,251; levies, £43,819; subsidy, £48,432. 1926----27, net expenditure, £99,288; levies, £47,162; subsidy, £52,126."