SINKING FUND PROPOSALS.

Northern Advocate, 20 September 1910, Page 2

SINKING FUND PROPOSALS.

.'j AS THEY APPEAR TO ACCOUNT- . | ANTS. i ! ~— j j ''/Question box" evening with the . I Wellington Accountant Students' Socy Aety regularly evokes some interest- : i ing side-lights on current problems ">n _ j tlie financial world. At a recent meetV ; ing of the Society, which was very . i well attended, the most topical ques- ■ j tion in the box was No. 11, which ran as follows: — j "State concisely the sinking fund | proposals of the Prime Minister for i the redemption of the national debt. 'Is it sinking fund as understood by ac- | countants, and are there any special . ' features in it " > : "As understood by accountants, the . i proposal is to establish a sinking fund i ! for the redemption of the national > I debt. At the end of each financial | year the Auditor-General would cerjtify to the exact amount of the public debt and the sum which, if invested at j i per cent, compound interest, would be actuarially required to extinguish ' the debt in seventy-five years, such j amount to be payable out of the Consolidated Fund. The amount of this ! annual sum would, of course, vary each year according to ths then amount of the public debt, and the rate of interest being earned by the investment, for it is provided that after tne ! end of the financial year 1915, the m- ! t?rest instead of being calculated at i the rate of 4 per cent, should be tho j actual average net interest earned by • the funds invested during the previous j three years. The object of the proI posal is to save borrowing. i ' "Regarding the second part of the j question; it is a sinking fund as under ) stood by accountants in the ordinary ! sense of the term, inasmuch as it is I created for a specific object, a special ! feature being that all investments ore jto be made within the Dominion in : loans to settlers, to workers, and to 'local authorities, under the provisions 'of the "New Zealand State Guaranteed 'Advances Act, 1909. This at first may ' not seem to be a very sound policy, , but considering the great and growing demand for money in the Dominion for development purposes there need not (it was thought) be any misapprehension ass to the failure to invest j the funds "