WHO FAYS?

Evening Star, Issue 19615, 22 July 1927, Page 2

WHO FAYS?

POWER BOARD LOANS CONSUMER OR RATEPAYER ? “ During the twelve months ended March 31, 1925, the gross indebtedness (excluding loans from Government) of all local authorities increased by £0,610,794, tho greatest increase ever recorded during any one year. The principal contributions to this growth were:— Boroughs, £3,663,500; electric power districts, £1,773,892 5 harbor boards, £580,015; counties, £462,383. During the last decade (1915-25) the debt of local bodies has more than doubled, boroughs being responsible for over £13,000,000 of the £25,000,000 increase. Electric power districts do not appear till 1921, since when the debt has grown steadily to over six and a-half millions in 1925.” This passage from the Now Zealand Official Year Book (1927) carries the figures for local body indebtedness up to March 31, ’l92s.—The Wellington * Post.’ According to another Government publication, the -‘Local Authorities’ Handbook,’ an analysis of the position of electric power boards as at March 31, 1925—tw0 years ago—shows total net liabilities amounting to £6,689,080, carrying an annual charge (interest and sinking fund) of £464,946, which has grown proportionately in the interim, _ln the table given in the ‘ Local Authorities’ Handbook ’ there are two boards whose total net liabilities run into seven figures—Auckland £1,671,204 and Southland £1,635,619. , In each of these two cases the total annual charge runs into six figures—Auckland £133,229 and Southland £105,000. But the Public Works Statement (hydro-electric section) for the year ended March 31, 1926, shows that while Auckland had a gross sale of electricity totalling £408,090, the figure for Southland was only £27,168. Less even than Wanganui-Rangitikei (£45,579). In the same table is a column showing rates collected by electric power boards, and it indicates that in tho whole dominion up to that time only six power boards had had to collect rates, and the total taken by them from their ratepayers to March 31, 1926, was £92,185, of which the Southland ratepayers, who generate their own power, found no less than £78,807. - Tho moral seems to he that the big borrowing of electric power boards is not noticed so long as all expenses can bo recouped from the sale of power, bub if a hoard blunders, or if (through blunder or otherwise) the hoard is compelled to fall hack upon tho ratepayers, the latter forthwith receive a real electric shock. A now state of opinion is set up as soon as tho ratepayers, in addition to the consumers of power, are called on in a big way to foot the bill. It is only when sales fail to meet demands that the pubic begin to realise the existence of a rating power that, if applied, is felt widely and keenly.

In the circumstances there may be something in the rumor that the Southland Power Board, which acted largely as its own pioneer, might lie taken . over by the Government if the ratepayers down there could induce the Government to shoulder the burden. Why has the Southland Board reached a financial position requiring it to call on the ratepayers? Some accounts say the reason is long lines thrown out far and wide after small business. Others say that this pioneering is in the proper spirit; that the Southland Power Board is doing its duty by the back country and creating new business; and that everything will bo all right before long. But how long? Evidently it is possible for power boards to err: For loans to be based on business that is not there; and for rates to bo called on to make good the deficiency in revenue from users. On the other hand, a number of cases can be quoted in which power board finances look buoyant, and in which they claim to be doing business that is sound as well as developmental.

On the subject of the Southland Power Board the following laconic sentences appear in the last annual report of the Chief Electrical Engineer, Mr F. T. M. Kissell ‘ ‘ Southland has been in active operation from its own water power station for months. It has about 2,300 miles of lines, and supplies 5,040 consumers.” The same authority remarks: “The total amount of loans authorised by the thirty-fiv© districts which have already taken thejr polls is £10,121,788. The population of the districts concerned is 811,830, so that the loans authorised amount to £12.5 per head of population, as compared with £13.2 last year The unimproved valuation of the districts is £245,153,266, so that the loans authorised amount to about 4.1 per cent, of tho unimproved rateable value of the lands pledged as security for the loans. Tho voting at tho polls amounted to 42,471 to 5,532, a majority of 88 per cent.”

In deprecating destructive criticism, the Minister of Public Works points out that, while “ one or two of the power boards have not been as successful as others or as they might have been,” mistakes have been few in proportion to the total work "done: and tho Government is keeping check on boards’ undertakings and prospects. Lake Coleridge, ho emphasises, has now been in operation long enough to be a proved success; it possesses both a depreciation fund (£111,526) and a sinking fund (£8,907), the 1925-26 profit having been sufficient to start the latter. Horahora is on a depreciation fund and sinking fund and also reserve fund basis, the figures of these funds being respectively £46,444, £28,939, and £30,554. At Mangahao. a young service, the balance (£64,992) of revenue over operating expenses in 1925-26 was not sufficient to pay interest and depreciation, and fell short by £67,291. but the balance represents a bigger payment towards capital charges than Coleridge was able to make at a similarly early stage of its development.