The Grey River Argus FRIDAY, August 6, 1937. BOROUGH FINANCE.

Grey River Argus, 6 August 1937, Page 10

The Grey River Argus FRIDAY, August 6, 1937. BOROUGH FINANCE.

A discussion of general interest was that of the Greymouth Borough Council last evening relative to the financial position. In recent years local bodies hav« in many instances spent more than they would otherwise have done on account of the existence of unemployment, an inducement being offered by the State in the shape of a subsidy on labour from the unemployment taxation. Some Councillors have been induced to take into account the expenditure locally Qn account of the fact that the municipal budget does not balance. There is in the expenditure estimate for the current year a sum of about £B,OOO for which no provision is made on the revenue side, or about £2,000 more than the amount unprovided for last year. In addition there is outstanding revenue to the extent of £6,500, making roughly £14,500, but much of the outstanding revenue doubtless will be recovered sooner or later. Other Councillors attribute the leeway to the fact that the Council has not borrowed more for some of its works which are of a capital nature, thereby distributing the cost over the future. The question arose as to where economy could be effected, and it appeared that, apart from the works instituted in order to cope with unemployment, instances were few in which economy was suggested. Certainly, local bodies have been regarded by the Government as having an obligation to co-oper-ate in unemployment relief by making money available for works for which there are large sums granted by the State in the way of subsidy. The country generally might have been in a worse situation than it is had not a great proportion of the unemployed been thus maintained. To a large extent, local bodies have been gainers from the works done

and the only qustion is whether the arrangement could he indefinitely continued to the advantage of 'local bodies. It is generally recognised, of course, that relief works are really in themselves no true substitute for ordinary employment of a reproductive character, the aim of the Government, being as far and as soon as possible to have the unemployed absorbed into regular industry. In the meantime, local bodies arc justified in doing everything they reasonably can to tide over the period during which the unemployed remain so numerous as they still are. It might be said that any local body running (into debt on account of relief works would require ultimately to count the cost, but locally the outlay on this score does not exceed £3,300 a year, whereas the expenditure unprovided for is more than double this total. The hospital levy is generally cited as responsible for the increasing of local rates, and gives rise to the suggestion that the sooner this obligation is made a national one, the better. At the same time, the saute thing is said of unemployment relief, on the score that property owners are apt to be unduly penalised. On the other hand, it is also pointed out that the unemployed, if not all rate-payers, are in the exceptional cases rent payers, and rents here are relatively high. No Councillor, however, has discussed the question of the bearing of rates upon rents, not -to mention the adequacy of housing. A comparison with other towns of a similar size might afford a useful conclusion on this point. The Municipal Gas Works shows a profit of more than £I,GOO, while there is certain revenue from licenses and taxes, also from water supply beyond the ordinary, and the Town Hall is an earning asset. Latterly, however, the town has been growing, and the prompting of the unemployment policy in the way of subsidy has: coincided with the need for certain works entailing considerable outlay. The posi lion, therefore, is not one to cause meantime any serious misgiving. It is only prospectively that there might be justification for a review of financial policy. The sewerage work is essential, and the Borough is fortunate that the Government is going very largely to assist in finding the money. That, of course, is a conclusion which requires a certain qualifi cation. The increase in population, and in property values should mean greater ability to bear the burden of increasing expenditure. It is impossible to avoid an increase in expenditure. Assistance with works from the unemployment taxation has enabled various ones to be carried out that might have had otherwise to wait. These works have created an asset. But the aforementioned qualification is one so abvious that it scarcely needs mentioning. The test of Municipal finance is not the amount of revenue, but the degree in which rates bear upon values. Tlie advocacy of borrowing is doubtless based on the expectation that it will avert increases in rates. The best test, of course, is a study of the effect of past loans. For works like sewerage, borrowing is unavoidable, even though loans have ultimately to be repaid twice over when interest is allowed for. The latest increase in the Borough rates is small, and is important only as showing a. tendency. This is the essence of the question. If Councillors are able, whether by economy or enterprise, or borrowing, to assure that next year rates will be reduced, it will be a good test of their policy.