LOANS TO LOCAL BODIES

Evening Star, Issue 14225, 26 November 1909, Page 1

LOANS TO LOCAL BODIES

STATE GUARANTEE PROPOSALS. BILL PASSES THROUGH COMMITTEE. [From Our Parliamentary Reporter.] WELLINGTON, November 26. Iho House last evening went into committee. to resume consideration of Hie New Zealand State Guaranteed Advances Bill. Iho part under consideration \ras that dealing with advances to local bodies. The working of clause 68, which provides that the rate of interest charged to local bodies shall he the same as that paid by the Government on the money raised, was slightly amended, op. the motion of the Ibinie Minister, who made it plain that there could be no rebate allowed to local bodies for punctual payment. At clause 70, which provides that on the Bill becoming law no more loans under Part 11. of the Local Bodies’ Loans Act shall be made (except where the local authority has already taken steps in connection with a loan), Mr Newman moved to exempt county councils and road boards from tho operation of the clause.—The Prime Minister said that the proposals of the Bill did not make the rate of interest higher, when all the circumstances were taken into consideration. He was surprised to find that there was application Ironi any country members. The increase in interest would not mean a difference of 30s on a 'oan of £SOO. To prove that the Bill was appreciated by local bodies, he (Sir Joseph Ward) pointed to a pile of telegrams, and selected one from the Raglan County Council, which ho read, to indicate to the House that the system would bo welcomed by local bodies in the country.—Mr Massey said that for twenty-five years the Act' they were asked to repeal had given the very greatest satisfaction. Under the old Act a local bodv borrowing £l,ooo' at 3] per cent, would wipe the loan out at the end of forty-one years, because of the sinking fund to which they were contributing. Under the new- Bill, :i loan of £I,OOO would entail a high rale of interest. It would be necessary to add 1 per cent, for sinking fund |ii/j poses u>_ the amount of 3] per coni, charged in 'iitercnt. That really meant a charge of per cent, now, compared to 51 per cent, under the Act which it was intended to repeal. Ho saw no reason why the two Acts should not work together. The new Act could be used to advantage ty harbor boards and county councils inquiring large loans, but the old Act was best suited for the purposes of the smaller local bodies.—Sir Joseph Ward said that under the old Act power was given for the raising of funds to the extent of £260,000 per year. Under the present Bill the amount was increased to £soo.ooo.—The amendment was defeated by 59 votes to 25. On clause 71 Mr Jas. Allen moved to insert at the end of snhclause 1 the following words;—-“ Provided that the limitations lo the amount that may lie lent in any one year imposed by section 69 of the Loans to Local Bodies’ Act, 1908, shall not apply to any loan applied for under this Act.” —This was negatived by 5S to 23. At clause 72 Mr Malcolm moved an amendment with the object of providing that, under the limitations as to amount provided for by tho existing law, the Grown shall continue to contribute as hitherto to the sinking funds for local bodies’ loans.—The amendment was lost bv 39 to 21.

Mr ISidoy moved to ad'd to the clause a proviso that provisions as to sinking fluids to be invested by tho Public Trustee instead of teing under the control of the Sinking Fund Commissioners shall only apply to loans guaranteed by the Government under the Act of 1903.—Sir Joseph Ward said he was sorry he could not accept the amendment. The proposals in the Bill do not refer lo any old loans, but only to loans that may bo negotiated in the future.—Mr Massey said the clause as it stood was simply an attempt to put a little more money into the Treasury. It had caused a great deal of friction amongst local bodies. Tho objection arose in not allowing local bodies to arrange their own sinking funds when going on lo the London money market for the loans.—Mr Sidey's amendment was carried bv 32 votes to 30.

On Part- V. of the Bill, dealing with mining advances, Mr Allen moved in the direction of including as security for advances the uncalled capital of a mining company, ;,s well as its assets.—The Prime Minister declared that this would prove unworkable, and the amendment was lost bv 55 to ;9.

The Bill uas reported with amendments at- 1 a.in., and the House rose.