The Evening Star TUESDAY, JUNE 21. 1938. PAYING THE PRICE.

Evening Star, Issue 22989, 21 June 1938, Page 8

The Evening Star TUESDAY, JUNE 21. 1938. PAYING THE PRICE.

It was a disagreeable necessity which the new council was under last night of increasing the general rate by fourpence and taking other measures to put the finances of the city on a stable basis after the “ easy ” methods of its predecessors. No alternative, consistent with sound principles, was open to it, however, in view of the position revealed. There was a deficit in the accounts for the past year of £14,929, carried to the special works fund, and for the current year an estimated deficiency in the general account of £44,485. If the supplementary account, the special works fund, was to be charged with that amount ns hitherto, the special works fund in turn would show a deficiency of £35,820. That was the gulf to be bridged by the council, and it was obvious that it could not do it by further withholdings from the renewal funds of the trading departments. Withholdings were made from these funds to the amount of £135,104 in a three years period. After two diversions had been made from the contributions to them their position was referred to the council’s experts for an actuarial investigation, and they advised that the renewal funds of four department® should be increased, as compared with those of the preceding year, implying clearly that the payments, ns curtailed previously by the Labour policy, were not sufficient. The council, however, resolved to defer the increases, in all but one instance, till the year which has now begun. It pointed out, in the statement by

Mr Taverner last night as chairman of the Finance Committee, that if a position was reached where the fund could not supply the requirements of the various departments for plant renewals, the only alternative would be to raise new loans.

How expenditure was increased under the Labour Council was succinctly set forth by the chairman of the committee. In 1934-35 the budget was balanced. In the following years a system of “ deficit ” budgeting was adopted, to provide for an increase in the complement of workers employed by the council. This increase was accompanied by a progressive advance in the basic wage rate, further adding to the outgo. The original object of the special works fund, it was pointed out, had been departed from in that special items had been charged to it which had no place therein, and were a proper charge on the general account. At April 1, 1938, owing to a heavy expenditure during the previous year, the special works funds available, allowing for the same demand on the renewal funds, were not sufficient to meet the expenditure for the present year. The scheme had, therefore, already fallen of its own weight. On the outgoing council, normally, would have fallen the onus of deciding what was to be done about it. But that council chose not to bring down its budget, according to custom, thus avoiding the odium of saying whether it would continue the withholdings from renewal funds, which would have required the rescinding of its own resolution of a year ago, or cut its expenditure and raise the rates, as its successors have been forced to do. Incidentally, the failure of the last council to submit its budget before going out of office means an additional charge to the ratepayers of £I,OOO for interest on overdraft due to the late sending out of rate demands, as a result of which the rate will not be collected till the middle of February instead of in December. A proud claim made for the Labour Council was that, when it established a special fund, it subsidised the unemployeds’ wages immediately up to award rates, and within eighteen months transferred to full-time employment about 500 men. The new council is unable to do so much for a class which the Goveruent says has been reduced now to normal proportions, and for whose benefit it levies taxation which increases in its aggregate amount as the necessity for it ostensibly decreases. The council has suggested to the Government that it should do more to assist these workers fay means of subsidies. If additional assistance is not given by the power that has the main responsibility the whole of the present scale of full-time subsidised work will have to cease at an early date, but it is expected that the assistance will be forthcoming. The Government will be advised also that scheme No. 6, which has been largely abandoned in other parts of New Zealand, can no longer be continued by the Dunedin City Council, for which it has meant a cost of £IO,OOO a year. Loans will bo required for works and water department requirements, in order that, even with Government assistance, men employed now may be kept on. There will be no diversion this year’ from the renewal funds, and rejection of that device, which was continued too long, threatening its own evils, leaves no alternative, in the face of heavily increased expenditure, to the increase of the rates which has been announced. The mayor moved an amendment for an increase of the rates which would have been less by one penny, but the majority of councillors judged that the full increase was necessary, though it was hoped that it would not be required for long. Less sound finance methods are pleasant while they last, but unfortunately they make their own penalties.