A REPLY TO “SPOTLIGHT."

Hawera Star, Volume XLIX, 29 August 1929, Page 4

A REPLY TO “SPOTLIGHT."

(.To the Editor.)

•‘‘Spotlight’s” arithmetic leaves much, to ibe desired, His assertion that £136,000 is about twice £&O,0G0 is shaky ( to say the least of it. 13ut his statement, that those wanting tile poll are Jed by some expert is an absolute misstatement. Mr.. Editor, the Bower Board's proposal is a business proposition, based on the purchase at a nxed price of an established business as a going concern which is producing a Kilon n revenue. There is no estimate aLout the price, which has been hxed by lair and impartial men. The revenue is recorded in the balanceislieets of the company. i flatly contradict “Spotlight’s” statement that it was on a capital of only BzbjOU) that the company paid its sixteen and twenty per cent, dividends. I hat is absolutely incorrect according to the company V own statement which lies before me In 1924 the company paid 16 per cent, on a capital of £53,050. In 1925 the comP .-!P paid P er cent, on a capital of 80d,050. In 1926 the company paid 7° P no~ Ce , nt ‘ 0,1 a ca P' tal of £53,050. In 192, the company paid 20 per cent, on a capital of £53,050. In 1927 the company reorganised its share capital by giving the shareholders 26 950 bonus shares—a gift which did not cost tiie shareholders one penny piece. I lie year that yielded the shareholders cdvio 1 ’ C w!' s^°' ved uett profits of i-0,_42. Alter the reorganisation and the issue of the free shares, the year’s nett profits increased to £9937, and in the following year to £11,371; but since the reorganisation, as “spot-

light ’ naively states, “the concern has only shown 8 per cent.” llie board is satisfied that the proposition is sound and solid from the ratepayers’ point of view, and we base that fact not on estimates, but on the known revenue of the company as disclosed in its balance-sheets. That alone would entail reductions of price being made to the public, because the board has no dividends to pay to shareholders. “.Spotlight” admits we would make a profit all right oil tho present business. But lie overlooks the possibilities of development, and the consequent increased profit. We are cutting down the monthly minimum charge at the outset. Other reductions will unquestionably follow in the near future. There are two lines of future development which will inevitably take place in the company’s statutory area of supply. Mr. H. G. Kemp, one of the company’s engineer witnesses,'stat-

er l in evidence that there is a vast field for development here. The public cannot afford to ignore - that. Mr. \V\ A. Waters, in confirming Mr. Kemp’s evidence, said the future held for the company an increase of 75 consumers in each year. Mr. N. G. McLeod, another engineer witness for the company, said these figures were conservative. I desire to emphasise the importance of this prospective development in the company’s statutory area of supply. Don’t forget that the company has been “skimming the cream of the load” by catering mainly for lighting. This practically leaves the field of power for heating ana cooking open for development. Just consider what additions this development would mean to the company’s revenue for current of £25,610 this last year. Again, the engineers named agreed that individual consumers would use more current in the future. A man who lias the light keeps the light, and he wants an electric iron or a radi-

ator or a range or something else. The official Public Works Statement confirms this growing demand for current for all purposes. Consider what an increase this would mean to tho revenue. I am absolutely convinced that the business which lias grown in the past will still further deveiop and

expand in the future, and I say that the increased profits the future holds should belong to the people, and not to shareholders. The people will have the benefit in the form of reduced charges. The second line of development in the future lies in tho lands outside the company’s area of supply—the lands which as yet have no current at all. These are completely undeveloped, and afford a sound field for extension. In W'aimate West we have a closely settled area of flat country- easy to reticulate, and with many who” are anxiously awaiting the current. A? was made clear at Auroa, there is a very profitable load to be handled, and the Power Board is out to develop tho district for the benefit of the people. Add the two together, “Spotlight”— the development of the company’s present area (with the natural increase and the growing load), and the development of the unreticulated areas

which are outside the company’s area. You. will live to be thankful that the Power Board took over for the benefit of the people. Meantime your remarks do not answer hard facts. Mere abuse is not argument, and is the refuge of those who have a weak case. No rate will ever be collected if the loan is carried, you may rest assured of that. Our engineer is well qualified for his particular work, and if the loan rested on estimates only, I would emphasise the fact that his estimates for other Power Boards have been found conservative and safe and have been upheld 1 by actual experience. The main issue in the present proposition is not based on estimates, but on a known price fixed by impartial, independent inen, after hearing the evidence of skilled accountants and engineers. “Spotlight” is backing the Avrong

horse. The price is known. The revenue is known. The only figures in the proposal which are estimated relate to development and to selfsupporting extensions of the present | system. That money will not he raised lat the start, but only as and when required. The figures are absolutely [sufficient for the whole of the work. The £7,500 for assistance to consumers will 'support itself. For reasons best known to himself, “Spotlight” prefers to leave the company with its monopoly, and its rich profits and its right to charge up to one shilling per unit. He lines up beside the few who say they would pupport the scheme if it were for the benefit of a small select area —the dog in the manger attiutde. The statements in the letter classify your correspondent, Mr. Editor, as does the flippant irreverence with which he closes his communication. —I am, etc.,

J. B. MURDOCH. Chairman S.T.P.B