THE MAYOR'S STATEMENT

Evening Post, Volume CXI, Issue 108, 7 May 1926, Page 11

THE MAYOR'S STATEMENT

DESIBE TO KEEP RATES DOWN.

• "The year is one in which it has been necessary for the councillors to take into consideration the question of how far they can expect the ratepayers to meet capital works out of revenue," said the Mayor, in moving the adoption of the estimates as laid before the council. "The original estimates, as every councillor knows, have been reduced very considerably, and only after the most careful consideration, for this is" not a time when we can put too great a burden upon the ratepayers. All those items that have been reduced are items that are in the most part capital expenditure, and whilst they are absolutely essential it is,'l believe, thought by councillors generally that ratepayers should have an opportunity, by means of loan proposal, of deciding whether those works should be carried out im--mediately or not. TWO EXTRAORDINARY CHARGES. '' There are two extraordinary charges upon the ratepayers this year. It is the minimum year of income in proportion to the calls upon the public service, for edthcr the first year of valuation iB more than it should be, or the fifth year (and I believe we are now verging on the sixth) is less than it should, be. "The water loan works, due to a series of circumstances well understood by councillors, have been delayed for nearly two years, or at any rate for more than one year, but if the main had been completed there would now have been a greater revenue from water. The entire interest on that Joan this year, for the first time, falls upon the ratepayers, to the amount of £19,000 odd, and the recommendation before tho council will be to add that amount to the water rate. . WATER RATE GOES UP. "In other words, there will'be an increase in the rates to the public of £19,000 by the addition of that amount to the rate. Had it not been for that, 1 believe, councillors would have taken into seriout consideration a rise in the (

general rates by casting that burden upon them. MAINTENANCE PLUS INTEREST. "There are extraordinary expenses beyond that. The whole of the interest and sinking funds of the £200,000 paving loan has to be met, while the money is very far from expended, and notwithstanding that we have to pay interest and sinking fund charge:; we have still to maintain the streets. When the whole amount has been expended there will be undoubtedly a considerable /saving in maintenance charges, and as a result thero will be a lessened general upkeep. "There is a cash credit on tho general fund of £13,466, and you can see that we are getting every penny that is possible to save putting a further burden upon ratepayers." There were certain amounts which might, however, not be required, continued Mr. Norwood. A sum of £2000 might be made available to the council in connection with the Ngaio subway, and it was doubtful whether tho £2500 for the soldiers' memorial would bo needed this year. The Technical College grant of £5000 could not be paid until the transfer of property was completed, and a valuable asset would corno over to the council if the payment was necessary. There were in the total, doubtful amounts of approximately £10,000, which were provided for, and might not have to be paid. "I recommend to you that you accept the estimates as worked out, which will leave the general rate this year exactly as it is, the only increased burden being the £19,000 odd in regard to the waterworks loan. SPECIAL WORKS LOAN. "The principal capital items the Works Committee has undertaken to go into, and they will form part of a loan schedule. I believe the ratepayers are the right people to decide whether these should be proceeded with or not. It does not follow that because they are omitted that they will not be gone on with. £20,000 FROM LIGHTING DEPARTMENT. "At present the council lias in its general fund, transferred from last year, £20,000 transferred from tho electric lighting reserve account, and it is proposed to allow that £20,000 to remain in the general account in the meantime, and that will be sufficient, should anything be sufficiently urgent to require it, to account for any special work during the year. We know that there is a cloud on the horizon at the present time, and we think that this is a time when wo should be most careful. THE CITY PLAN. "A sum of £1000 is provided for preliminary work in connection with the preparation of a city plan, and I hope that this will be agreed to, because it cannot be longer delayed." Councillor H. A. Huggins expressed satisfaction at the Mayor's suggestion that permanent works should be paid for out of capital. In regard to the water rate Councillor Huggins expressed the view that it would be better to raise the price of water through the meter instead of raising the rates. PROFITS SHOULD BE GIVEN BACK. Councillor R. M'Keen realised the great responsibility of the Mayor in connection with the estimates, but he did not think that tho profits from a trading concern should be used to meet charges which should come out of the rates. Those profits should be given back to the people they came from in the shape of reduced charges. Tha profits were going to be used to meet the deficit which was shown in the estimates. * The Mayor: "How do you propose to meet it? Increase the rates?" Councillor M'Keen: "Include it in your loan proposals." It was evident, said Councillor M'Keen, that the rates which they received were not sufficient to carry on with, and some new system of rating would have to be devised. Councillor Luckie: "I quite agree with you." Councillor M'Keen: "Yes, but your proposals will not meet the difficulty. We won't be out of our difficulties until we adopt a system of rating on the unimproved value." THERE SHOULD BE A SYSTEM. Councillor G. A. Troup said that so far as the water rates were concerned Wellington occupied a middle position in comparison with other cities. In regard to reserves, he expressed the hope that all commitments would be provided for. In regard to the money taken from tho lighting department, he thought they were taking the money in much too haphazard a fashion. The figures should be placed on a definite basis; tho various departments should know how much they were expected to pay. That was the proper business method to adopt. What inducement was there to an officer of a department to. build up a reserve when he knew that the council would come along and take it for general purposes. He considered that the various departments had done a very wise thing in building up reserves. The Mayor: "You think we should mc'■"•'-(! rates instead?" < iillor Troup: "I think we should make ;i set charge every year." He would rather see the council take, its courage in its hands and raise the rates than take the reserves built up by the departments. The Mayor: "This year wo arc up against special circumstauces. What would you do?" Councillor Troup: "I would raise the rates. At present we are livjng from hand to mouth." The Mayor said that they were not touching the reserves of the electric light department at all. They were calling on unappropriated profits. £20,----000 was less than a Jd a unit. How were they going to pass it on to tho public? The discussion was putting quite a false face on the matter before the council. The reserves would remain there, and the council would be able to meet any extraordinary condition arising during the year. It was for the council to say whether the money taken would be paid back or not. Next year there would be a revaluation, ■• and rates would automatically go up. DEPARTMENTS SHOULD PAY TOR FRANCHISE. Councillor M. F. Luekie said that the action of tho Mayor and tho Finance Committee in keeping down the estimates, without increasing rates was entirely commendable. Large profits had been, piled up by the electric lighting and tramways departments, which had paid nothing for the use of the streets. Every private concern contributed largely to the revenue of the council, and as long as the two departments were kept separate a certain percentage of the profits should be taken before the public received the benefit of any reductions in charges. He entirely approved of the principle that permanent works should be paid for out of capital. The policy of carrying out such works out of revenue had helped to cripple them financially. If the revaluation had been carried out in 1016, as it should have been, they would have had £40,000 increased revenue without increasing the rates. They would bo behind in their finance .so long as tho present rating system was in vogue. They should be rated on their annual value; that was the only proper and democratic system. Councillor E. A. Wright said that once before they had tried increasing the charges for water used for commercial purposes, but it had not worked. The Harbour Board had been able to supply shipping with water at a lower price than the council. How could they discriminate between tho water used in private residences and the water used for commercial purposes t At election times councillor*

promised all sorts of things, and at one election he had totted up all the promises. If they had all been granted, tho council would have needed £5,000,----000. If they increased the rates, the burden would fall on the big business houses. "But do they pay?" asked Mr. Wright, with emphaßis. "We all know they don't—the consumer has to pay." EXTRAVAGANT IN MANY DIRECTIONS. Councillor Aston mentioned again that better results could bo obtained, and possibly thousands of pounds saved annually, if the council would adopt a system of tender and contract for> much of its work. Better team work should be sought after in directions other than road paving. In many respects, he believed, the council was extravagant in its expenditure, and he could name half a dozen jobs which would not stand the light of day in comparison with similar work carried out by teams and contract. BORROWING FROM DEPARTMENTS. It was .very creditable to the various departments that they had been able to carry On as they had, said Councillor H. D. Bennett. He was of the opinion that trading departments should make some contribution to the general funds, but he agreed with Councillor Troup that there should be a system, in place of delving into the funds of those departments in a haphazard manner. The departments knew that they had to mak« provision for reserve and renowal funds, and they might as well be told that they were required to make a payment, upon a definite basis, to the general fund also. The council should go into the question of what was a fair and reasonable thing to take from departments, and the £20,000 should remain in general fund until that basis was arrived at. On a previous occasion a sum of £50,000 had been borrowed from the Lighting Department, and was never paid back. They were not robbing any reserve in taking £20,000; the Electric Light Department last year made a very substantial profit at a rate that was not excessive; it was a profit in excess of what was required to meet the cost of the change-over. The department was only just emerging from the steam area, and the benefits of the hydro-electric scheme would shortly be made manifest in very substantial reductions to consumers. Last year the profits made by the department were not less than :160,000, so that only onethird was being taken. That £60,000, moreover, was made after provision had been made, in accordance with the Act, for the real reserve account, which stood at £120,000. It was, of course, wrong to say that there was no increase in rates, for another £19,000 was being found, necessitating a very substantial increase in the water rate, upon the annual value, from 4} to 5.7 per cent. Councillor J. Burns said that he was not in favour of interfering with trading accounts, but he agreed that this was an abnormal year, and under the circumstances the council was wise in taking it. The council would shortly have to take into consideration the extension of libraries, particularly of the Central Library, in connection with the special loan. Councillor B. G-. H. Burn held that electric lighting charges should be reduced;'the Tramways Department had been able to reduce its fares, and had made ado of it. If necessary, the rates should be increased. The whole trouble, said Councillor Semple, lay in the fact that the system, of collecting rates was wrong, and he hoped that the Finance Committee would go into the fundamentals of rating, that the present patchwork system might be avoided. Wellington was the only place in the world, as far as he knew, replied the Mayor, which guaranteed the success of its trading concerns, and charged them not a penny for that guaranteed financial soundness. The estimates were carried on the voices by a large majority.

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