LOCAL BODY INTEREST

Lake Wakatip Mail, Issue 4011, 4 August 1931, Page 2

LOCAL BODY INTEREST

5 PER GENT. LIMITATION WKI.I.INC-TnX July 28. The Government’s Bill, embodying provision for a reduction by J per cent, in the maximum rate of interest which local bodies may pay for loans, was introduced iu the House to-night. The Prime Minister explained that it limits the rate oi interest to 5 per cent, (except where overdrafts have been raised in anticipation of revenue), and brings local bodies into line with the Government. The Minister of 1 inance would, however, retain ids former power to allow a higher rate under special circumstances. Mr Jtownie Stewart (Dunedin West) : Will Dunedin he able to borrow! - ' Mr Forbes: I understand Dunedin will he able to borrow quite as well as the Government. Mr Stewart: It is a Scotch city. ( Laughter.) Mr I’oroi's: 1 hoy iU’O (juiu* satisfied with ns debentures, and they find it possible to borrow at 5 per cent. It necessary, the rale can ho raised, but it will not be necessary there. Mr Coates (Leader of the Opposition) ; j )oes the hon. gentleman think

11 ie v could borrow at If per cent.! - ' Mr Forbes: I don’t know what they could do if it was put to them. They want value for their money. The Prime Minister subsequently secured tlic* approval of tlio House to deal with the measure at that sitting. He explained that it was necessary to pass it before the end of the month. Mr W E. Parry said the Hill directly affected local bodies, and he urged that it should he referred to the Local Bills Committee, so that any representations from interested parties might be heard. Mi- M T. Armstrong (Christchurch East) saiil he failed to sec how the Local Bills Committee was going to obtain any information that the Government did not already have at its disposal. Mr J. T. Hogan (Bangitikei) asked whether the Government was going to compete in the money market with local bodies as strenuously as it had in the past. If so, he considered that local bodies would not be able to get money at 5 per cent., hut would have to pay 1 per cent, higher than the .Government rate, as many did at the

present time. The Leader of the Labour Tarty (Mr H. E. Holland) asked whether, in the event of local bodies failing to secure money at 5 per cent., the Government would guarantee them,-and whether it would become responsible for finding the money. Mr IL A. Wright (Wellington Suburbs) said he believed that money would be available to local bodies at 5 per cent, so long as the security was sound. People would naturally bo somewhat chary in quarters where there had bene mismanagement. He considered that saturation point had been reached in connection with borrowing by local bodies, and the time had arrived when restrictions should be imposed. Mr H Holland (Christchurch North) urged that steps should be taken to prevent money going out of the country to an increasing extent as a result of reducing the internal interest rates.

Mr Forbes, replying, assured members that lie had discussed the Bill with the representatives of local bodies, and not one objection had been made. Mr Parry; That is all we wanted to know. The Bill, entitled “ The Local Authorities’ Loans (Bates of Interest) Bill,” was then put through the committee stage, road a third time, and passed.