Future of Port of Foxton

Manawatu Times, Volume 64, Issue 173, 25 July 1939, Page 8

Future of Port of Foxton

City Council Analyses Finances Conference of Contributing Bodies to Be Called

. The position of the Foxton Harbour is giving the Palmerston North City Council some concern and, following a report presented to last night’s meeting by the town clerk (Mr. J. R. Hardie), the council decided to call a conference of local bodies interested with the object of discussing the situation and framing recommendations regarding its future existence.

In a report to the council, the town clerk, Mr. J. R. Hardie, stated:— “The constitution of the board it as follows:—One representative of each of the followin';: Government, Levin Borough, Feilding Borough, Palmerston North City, Mauawatu County, Kairanga County, and two representatives of the Foxtoa Borough. The respective proportions of liability for interest and sinking fund on a loan of £16,000 of each community, as set out in the Foxton Harbour Board Amendment Act, 1917, are as under: Manawatu Cointy, 1-Sth. of a penny in the £; Kairanga County, l-24th.; Palmerston North City, 1-loth.; Feilding Borough, l-20th.; Levin Borough, 1-J2th.; Foxton Borough, 7-Sth. The loan liability of the board at September 30, 1937, was £12,380 and the annual amount of interest and sinking fund to be provided by the board to extinguish the liability on June 1, 1961, is £B2B 7s 2d. “On the basis of the existing indebtedness the total liability of the Palmerston North City Council is limited to the payment of the sum of £339 per annum until 1961. No greater sum may be levied by the board on the constituent local authorities unless:—(a) Further legislation authorising the raising of additional loans is passed; (b) the relative capital values as between the local authorities comprising the area do not maintain their present ratios.

Auditor’s Tags lu 1937 the position of the operating account was that income exceeded expenditure by £314, but that income had included rents amounting to £670, so that on a basis of actual wharf operations, the board suffered a deficit of £355, said Cr. Black. To that had to be. added interest of £576 and depreciation of £514, making a total deficiency of £1446. It could not therefore bo wondered at that the Auditor General had tagged the balance sheet for that vear as follows: “The bank overdraft exceeds the limit” and “The board has failed to comply with the Local Bodies Finance Act in that liabilities at the end of the year are not covered by cash assets and outstanding revenue.’’ Rents Basis of Revenue The reuts receivable in 1937 had amounted to £716, proceeded the speaker, und that, it appeared to him, formed the basis from which revenues, instead of being dissipated, might be drawn to meet interest and sinking fund liabilities otherwise falling on local bodies in the board’s district. Those rentals should tend to increase, but, assuming a cost of collection of rents at £SO per annum, that still left a substantial contribution toward tho liability of local bodies for interest and repayment of principal. That showed that if the port was closed it would save the City Council over that period (to 1961) a sum of £7OOO. But, if the port continued to be administered along the lines of the last 19 years, tho council would be paying £7OOO and getting nothing for it. Only in the three years ending September, 1919, 1920 and 1930, continued Cr. Black, had there been an actual profit ou the operations of the board itself, amounting in all to £3688. Of that sum £2822 was made in the year ending September, 1919. In every one of the other 16 years there was an actual trading loss varying from £235 to £1337 per annum, a total in 16 3 ears of £11,958, or a net trading loss over the 19 years of £S27O. Question of Depeciation The depreciation position, the speaker continued, was very difficult to ascertain. A reasonable estimate on average assets of £IO,OOO over the whole period might be five per cent, but more likely on certain of the /resets tho rate would be 15 to 20 per cent. On the basis of five per cent, the total depreciation would be £9500, and while the surplus revenue of £4917 had been applied to depreciation, it was at least £4500 short of the amount required. A launch was purchased at £9OO out of one year ’a surplus revenue, and the following year tho local bodies were rated because the year’s operations showed a loss. The position, said the speaker, was gradually becoming worse. In fact, at September, 1937, there was every indication that the costs of handling cargo would exceed the wharfage received. When the loan ,had been raised it had been said that there was little likelihood of the local bodies ever being called on, but they had been called on already to the tune of £2588 and were still liable until 1961. Concluding, Cr. Black said that when a port was faced with a position like that it should look to increasing its wharfage rates to balance the accounts, but no effort had been made to do that. Tho Harbour Board was relying on the rates to balance their accounts. If the Harbour Board members considered that there was still hope for the port and that it could be developed on sound lines, why had they not tried in the last 20 )ears instead of leaving it until now to face the accumulated loss? Rather would he like to seo the rents d* voted to some development of the t >wn of Foxtou instead of being “poured down the sink” as at present. The Mayor (Mr. A. E. Mausford) pointed out that the council did not know they actually had collected all the rents, nor what the amount would be. This information should be made available for the conference.

Mr. Hardie submitted for the information of the council: (1) Opinion of the city solicitor regarding the council’s position; (2) schedule of the main items of receipts and payments, 1919-1937; (3) schedule of total wharfage and cost of handling goods and percentage of the latter to the former, 1919-1937, and (4) graph showing the various items of receipts on a tonnage basis and also total wharfage and handling costs. In speaking to the report, Cr. W. G. Black said that a very careful analysis l ad been made of the balance-sheets of the last 19 years, but unfortunately the balance-sheet for 1938 was not yet : vailable and correspondence to the harbour board had not been acknowledged.

For the year ending September, 1937. the total receipts, exclusive of special rates, amounted to £1589, while the expenditure amounted to £2055. There did not appear to be any indication that the receipts would, in future, increase sufficiently to meet the expenditure. It would therefore appear that the special rate on local bodies had come to stay.

Economically, the Foxton Harbour Board was not justified. The City Council, which supplied the bulk of the traffic through the port, did not show any saving on the cost of coal imported through Foxton compared with similar imports through other ports. In fact, the sea freight, wharfage and rail charges through Foxton was so fixed as to equal those charges for coal brought through Wellington. Proceeding, Cr. Black said that the I City Council was faced with the neces-! sity of finding its portion of interest 1 and sinking fund on the loan of £16,000 ■ (which in 1937 amounted to £12,287) I until June, 1961. In 1919 the ciedit! balance at the bank was £1896 and in 1921 tho board received a refund from loan account of £877 in respect of interest bn loans previously paid from the board’s general account. In addition, from 1919 to 1937 capital receipts amounting to £2817 had been credited to the board’s general account. The striking thing about that account was that over the same period rents came to a total of £10,598 and the rates contributed by local bodies also provided £2557 up to September 30, 1937. Capital expenditure including dredging for the same period amounted to £4354. The loan of £16,000 authorised by the ratepayers, in 1919, said Cr. Black, was expended chiefly as under:—WLarf, £3000; dredge and pontoons, £4621; goods shed purchase, £1093; new goods shed erected, £5103. In 1934 the value of the dredge was written down to £SO. Right from the time it was purchased the dredge was largely ineffective, as little labour had been shown in the accounts for operating it.

The town clerk l report is to be circulated amongst the contributing local bodies prior to the conference and the council s representatives will bo the Mayor, Crs. G. Tremaine and W. G. Black.