MUNICIPAL FINANCE

Evening Star, Issue 19723, 25 November 1927, Page 6

MUNICIPAL FINANCE

HOW THE RATES ARE USED ADDRESS BY MR H. HENDERSON la a lucid and interesting address after luncheon at the University Club this afternoon, Mr H. Henderson, the city treasurer, explained to an appreciative audience the why and wherefore of municipal finance. “ The average citizen does not concern himself to any extent with regard to the details of municipal finance,” said Mr Henderson, in his introductory remarks. “lie lias been given to understand that the position is satisfactory and that our trading departments make good profits each year. Ho will tell you that Dunedin is solid, and except perhaps for a growl about the amount of rates ho is called upon to pay each year, he is content to leave it at that. I think it is well, however, to have some criticism of our accounts. • Our loans are mounting up at a rapid pace, and tho time cannot bo many years distant when we must consider the question of putting .on the brake.”

Tho speaker went on to say that at the present time loan money _ was so easily obtained that they might he tempted to overdo tho borrowing, and this applied principally to uon-repro-ductivo loans, such as those used,for street works and drainage. In those cases they should first consider whether they were prepared to pay_ the increased taxation that must inevitably follow. During recent years tho Audit Department had become more up to dale when dealing with the commercial accounts of municipalities, and tho methods of compiling profit and loss accounts were closely scrutinised and subjected la criticism. At one tirao they would only audit receipts and payments accounts, and those had to be called a balance-sheet.

At tho present time they had on their books about 16,000 gas accounts, 18,000 electrical accounts, and 17,000 rate accounts, as well as about 3,000 sundry accounts—a total of about 52,000. With the cash register system tne posting and balancing of tho accounts was a fairly simple matter, and on the last (lay for payment of rates the cash register put through one receipt every eleven seconds. Dunedin, once again leading the way, was the first municipality to use this system.

• “ I sometimes hear a ratepayer growl about paying £lO or £2O a year for rates for which he states he receives no return except perhaps his footpath top-dressed now and again,” continued Air Henderson, “ and it is difficult to convince him that ho is getting more than value for his money, but actually it is so. If you look back at one of our rate forms you will sco a schedule which is intended to show in concise form how the rates are spent. Now, I want each of you to assume that you live in a property which is valued at £I,OOO, the annual rateable value of which is £SO. Your rates for the current year would ho as follows General, £5; drainage, £2 18s 4d; hospital, £1 ss; water, £l 17s 6d; closet, 10s; total, £ll 10s lOd. your drainage rate of £2 18s 4d is handed over to the Drainage Board, and is spent in paying interest qp the loans which have been raised for the construction of sewers, in cleaning and maintaining the sewers and drains, and in running the pumping station. Tho hospital and charitable aid rate of £1 5s is paid to the Hospital Board, and is spent on maintaining their numerous institutions, on charitable aid, and on paying tho wages of nurses,' etc.” The speaker explained that the water rate was handed oyer to the water department to pay interest on ifs loans and' general maintenance. A portion of it was used on extensions, and a few thousand pounds came back to the municipal department as a contribution. This left the general rates of £5 to be accounted for. The municipal department had other sources -of revenue in thd shape of rents to tho value of £1(5,000 per annum, licenses of various kinds, and a sundry revenue of £IB,OOO, in addition to which the trading department contributed almost £31,000 per annum to the municipal department in relief of races. Thus, in addition to the £115,000 wducu was collected for general rates, they had a sundry revenue of £65,000, and the municipal department was therefore able to subsidise the £5 received from the ratepayer to the extent of -‘2 15s, making £7 15s available for expenditure. Therefore, in return for the £5 tho council was able to givo services to the valuo of £7 15s, and the ratepayer might consider himself fortunate that the department had rents and other sources of revenue, and that the trading departments were in a position to contribute £31,000 per annum to tho relief of rates; otherwise it would bo a question of increasing the rates on a £I,OOO property by £2 15s, or reducing some of tho services and benefits now received. “ 1 want you to examine the cost of each of these services and consider whether they are worth the expenditure,” stated Mr Henderson. “1 have worked out tho expenditure under each heading on the basis of £SO of annual rateable value in order to show, first, the actual cost of the various services on this basis, and, secondly, the amount that each of you is contributing to these services out of your £5 of general rate.” , In order to put the position clearly the three headings were defined as:(1) Total expenditure; (2) expenditure per £SO of annual rateable value; (3) amount contributed by ratepayer per £SO annual rateable value. The figures given after each each work ran in that order. Public Works, £55,000, £2 7s Gd, £1 10s 8d; street lighting, £9,300, Bs, 5s 2d; baths, £1,950, Is Bd, Is Id; sanitation, £15,038, 12s lid, 8s 4d; reserves and gardens, £13,320, 11s Gd, 7s sd; library, £4,G20, 4s, 2s 7d; interest, £51,500, £2 4s 4d, £1 8s 7d; Fire Board, £7,650, 6s 7d, 4s 3d; sundry - contributions, £5,090, 4s sd, 2s lOd; sundry expenses, £8,940, 7s 9d, ss; administration, £7,350, 6s 4d, 4s Id—totals, £179,758, £7_ 15s, £5. In analysing’the figures still further tho city treasurer pointed out that the public works cost the ratepayer £1 10s 8d a year, or Id a day, in return for which the works department had to keep the streets clean and in good repair. Street lighting cost 5s 2d a year, or l|d per week. Baths cost Is Id a year, and if every ratepayer used them once a week on an average they would become a good paying pro* position. Tho sanitary, health, and Inspection department cost the ratepayer 8s 4d a year, or 2d a week. In return for this people had their dust removed once or twice a week, and the department inspected all shops and premises where food was sold, and acted in conjunction with the Health Department with regard to infectious diseases, etc. Reserves and gardens cost 7kl a month, and the library 2s 7d a year, the interest and sinking fund cost £1 8s 7d a year, or nearly Id a day, and represented interest and sinking fund on the £34, which was the ratepayer’s share of the municipal _ department’s loans of £769,000, which had been spent on street paving, construction, highways, etc. For the Fire Board the ratepayer paid Id per week. It was mentioned that the corporation was called upon to meet half the cost of the fire brigade, the other half being found by the insurance companies. Sundry contributions called for 2s lOd a year, and this wont towards the upkeep of more than a dozen bodies and societies which the municipal authorities felt called upon to support. Sundry expenses accounted for ,ss' a year, and administration cost nearly Id a week. “You will see,” continued Mr Hendersottj “that your contribution for rates is absorbed in the maintenance

of a variety of services, and, although I have endeavored to demonstrate that good value is given for your contribution to each of these services, you will doubtless consider that “ mony a little maks a muckle,’ and that your rates, on the whole, amount to a goodly sum. That, however, is necessitated by the spirit of the times, which calls for a higher standard in all services than in Sast years. It is necessary that this igher standard be maintained if Dunodm is to bo kept on the map.” Tho speaker concluded with an outline of the work of the trading departments, which he referred to as being an ordinary limited liability comEany. Every ratepayer was a sharcolder, and received his annual dividend.