CITY’S TRADING

Evening Star, Issue 20556, 7 August 1930, Page 9

CITY’S TRADING

REVIEW OF FINANCES FIGURES MUST BE COUNTED SATISFACTORY ELUCIDATING STATEMENT BY TOWN CLERK The year just closed can fairly claim to have done its full share in maintaining the satisfactory position achieved in the past by the Trading Departments, states the town clerk (Mr G. A. Lewin), in a comprehensive survey of the city’s finances in his annual report. The graphs are, as usual, most illuminating. The two diagrams appearing # in the report dealing with what is designated the General Account—that is the account in which is treated the ordinary activities of the city’s affairs as opposed to the Trading Departments—indicate that the expenditure, representing £240,263, was in excess of the income of £237,109, These figures are, however, subject to some slight adjustments due to outstandings, and when these are allowed for, the two sides of the account are practically in harmony. The figures respecting these diagrams include the Hospital , Board levy, and a comparison of the source of income with the figures of the previous year show very little variation. This year direct rates contributed 66.76 per cent, of the total, as against 66.11 per cent, for the previous year. On the expenditure side again, public works and sanitation this year absorbed 38.57 per cent, of the total expenditure, as compared with 38.15 per cent, last year. There is, however, a further slight increase in the percentage rate that_ had to be provided for interest and sinking funds on borrowed money, as this year the £62,438 used for that purpose represented 26.99 per cent, of the total outgo, whereas last year’s contribution for similar purposes, amounting to £63, 176, was only 24.04 per cent, of the outgo to March, 1929. The diagrams showing the disposition of the income of the several trading departments call for no special reference. In reviewing these figures in last year’s report, attention was directed to tin* gas department, where the position was shown to be less satisfactory than had been the case in previous years. The declared surplus in this account is again lower this year, and it is evident that the account has not yet become adjusted to the effects of the increased capital expenditure of the recent past years. The income shows a slight increase, and this is all the more reason for satisfaction when it is remembered that the returns for the sales of gas are quite buoyant; it is the returns from residuals that have not provided their relative share of the income.

The diagram showing the amalgamated figures of the whole of the trading tranches is again worthy of perusal, and the fojiowmg tables indicate the movement of the call on the income for working expenses, interest and provision for renewals and depreciation during recent past years, and a comparison or the declared surplus in relation to the varying loan capital for each year. TABLET.

The figures comprised in the table afford much scope tor interesting comparisons. Take, for instance, the year 1926 in comparison with the year just closed —that is, to March, 1930, Mr Lewin selected the year 1926 because that was Exhibition year, when the income made a rapid advance > owing to the abnormal conditions arising out of the Exhibition. In that year the total revenue was £539,731. To March last tho pormal activities provided an income of £572,929. The special interest that attaches to these two groups of figures is emphasised by a comparison of the' disposition of tho total for each year respectively.

A glance at the table indicates that last year working expenses absorbed a shade less of the total than was the case in 1926, but on the other hand the standing charges on the increased capital expenditure that has become necessary to provide last year’s income has made relatively a much heavier demand on the income than was the case in 1926. Interest called for 19.31 per cent, of the income to March, 1930, as compared with only 15.08 per cent, in 1926, while renewals and depreciation claimed 18.48 per cent, as compared with only _ 12.99 per cent, for the same years, with the result that the ratio surplus, both to income for the year and also _ to loan liability, shows a marked shrinkage for the year just completed in comparison with 1926. That comparison, while interesting, should not be regarded with any degree of apprehension respecting the progress of the departments, and if the figuree are analysed without regard to the year 1926, they must be counted as quite satisfactory. Indeed, after allowing for the “ set back ” to the gas figures, tho year just closed can fairly claim to have done its full share in maintaining the satisfactory position achieved in the past. In Table 11. is shown the varying percentage of surplus to loan capital in the several accounts respectively, and the figures are interesting as indicating the movement during tho past few years.

TABLE 11. Percentage of Declared Surplus "to Loan Capital.—

“Exhibition year. The most striking feature in respect of these figures is the position of the gas department, inasmuch as in 1924 Its surplus represented 13.94 per cent, of its loan capital, whereas to March, 1930, the figures drop to 8.72 per cent. Apart from the effect of the increased capital expenditure in this account, with its added demand for standing charges, it would seem that the coal position experienced during the past year or two to some extent explains the position in which this branch finds itself. That position is likely to improve in the near future, and, then we may look for a distinct improvement in the results and a gradual recovery of the position that the gas department has tor many years occupied as a profitable trading venture. It is, however, pleasing to be able to record the steady growth of the electric department. The table indicates that, despite heavy additional capital expenditure at Wainori—much of which, has not yet reached the stage when it comes to play a part in producing income—the percentage of surplus to loan capital has again advanced this year from 2.64 per cent, to 3,10 per cent. In dealing with these figures in last year’s comments doubt was expressed that the figures for the year then ahead would reraajn at the level for the year just then closed, inasmuch as special provision of a more or less temporary nature, but involving heavy outlay, was called for to nieet the growing requirements until the dam should have been completed. The provision to which reference is here made was not provided sufficiently early to have any great influence on this year’s accounts, and while the water position at Waipori sufficed until the end of the financial year, trouble came very early after the years accounts had been closed. It is therefore to be apprehended that 1931 is not likely to provide the same satisfactory results in this account as is disclosed by the figures in the foregoing tables for 1930.

Working Renewals and Revenue. Expenses. Interest. Depreciation. Surplus, £. Per cent. Per cent. Per cent. Per cent. Surplus to Loans. Per cent. 1921 . .. 418,515 55.29 17.92 14.12 12.67 3.91 1925 . ,. 435,648 53.10 18.05 14.11 14.74 4.13 ny2G . .. 539,731 50.00 15.0S 12.99 21.93 7.26 1927 « .. 524,347 56.44 16.24 14.87 12.45 3;74 1923 . .. 527,817 52.61 17.38 16.85 13.16 3.87 1929 . .. 545,803 52.01 18.24 17.53 12.22 3.38 1930 . ,, 572,929 49.21 19.31 18.48 13.00 3.56 «] Exhibition year.

Gas. Electric. Tramways Water.

o' %■ < /« 0/ 1924 ... 13.94 2.75 2.68 4.22 1925 ... 10.64 2.77 2.92 6.10 U926 ... 13.61 4.09 11.43 9.07 1927 ... 13.08 2.30 1.80 7.75 1928 ... 9.67 2.49 1.8S 8.43 L929 ... 4.63 2.64 1.48 8.57 L930 ... 3.72 3.10 O JO 7.36