LOAN CHARGE BURDEN

Evening Star, Issue 20556, 7 August 1930, Page 10

LOAN CHARGE BURDEN

ABSORPTION OF INCREASED RATES RESTRICTIOHS; DUE TO SINKING FUNDS DIFFICULTY EXPECTED IK BAISIMG MONEY -■ _____ V' ' > hi the past fourteen years' the call for loan charges has absorbed more than the increased ! rate income due to the accretion in the rateable valuation of the city of Dunedin, The town clerk (Mr G. A. tewin), in his annual report, comments on the acceleration oc activities through the ease of borrowing loan moneys locally, but he .anticipates. that ; the city may experience greater difficulty in meeting its requirements for finance, owing to the existing financial stringencyThe new graph appearing in the, report'on'the important subject of rate revenue in its .relation to'the standing charges on borrowed .money is interesting as showing the relative movements of these two sets of figures. .. : The diagram embraces the period 1916-30, In the former of these year* the general rate is represented by yearly payment of £42.238, on a rateable valuation of £668,901. At that time the yearly charges by way .of interest and sinking fund 1 on money borrowed and expended under the general account for ordinary civic development amounted to £IB,OOO. By 1930 the rateable valuation had __ increased from the £668,901 of 1916 < to £1.343.927, giving - a rate income o£ £128,352.' Likewise the standing charges on the borrowed money had grown to £56,032, from which fact it is apparent that the call for loan charges had absorbed more than the increased ratal income due to the accretion in the rateable valuation of the city. “ Now that borrowing by local publio authorities is under control in respect! of the provision for sinking fund, the tendenc3 r is .that this very necessary provision will, further add to the burden,” states Mr Le'win. “Our practice in the past has always been to> provide what was regarded as a •fairly accurate provision for the redemption of borrowed money, but that provision has not in all cases been sufficient tA comply with the dictum of- repaying loan moneys during the ..estimated lira of the asset created by the expenditure*The full provision to meet that requirement. is certain to have a restricting influence in embarking upon certain' schemes that call for heavy borrow* ing. ' ■ ■“ The ease by which we have beea enabled to raise loan moneys . locallyduring recent years has to some extent contributed to the acceleration of our activities, but it would seem that owing to the financial stringency that now exists greater difficulty may be' experienced in meeting our requirements fo# finance Whether that may finally prove to be a change , for the .better or otherwise is an open question.”-