LOCAL EODY LOANS.

New Zealand Herald, Volume LVII, Issue 17622, 8 November 1920, Page 6

LOCAL EODY LOANS.

The Prime Minister has at last given his reason for refusing to sanction an increase in the rate of interest that may be paid on loan money by local bodies. He states that the needs tof the local bodies which have come before the Government amount to £10,000,000, that they are competing with one another for the money available, and that if the competition was permitted to run its course interest might rise to 10 per cent. The remedy suggests is to defer all the less urgent .works. This is good advice but it is altogether hopeless to leave it at that, for each local body will be disposed to regard its own work as urgent. The Government has the power in its own hands to put a check on this excessive demand. No local body can raise money by loan without the authority of the Governor-General-in-Council. Possibly this authority has in the past been regarded as merely* formal, but if the position is as Mr. Massey states, the formality should cease, and. the Government should exercise a live supervision over f the authorisation of local loans. Indeed there is no reason why it should not classify the local loans in the order of their urgency and permit only such flotations" as the money market, can meet. So far the Government has taken up a purely negative position, the effect of which is to paralyse, all local initiative. Local bodies have tried to get money at 5£ per cent, and have failed. There is an absolute rdeadlock, and although the Prime I Minister is reasonably urging economy upon local bodies, he will not say that the present state of stagnation is a good thing. It may be that the Government has already authorised loans for works that are not urgent. _ If so steps should be taken to revise the whole position. There are local > loans of pressing and vital importance. The Auckland City electricity loan is one of them. This work is essential for the progress of Auckland. It cannot be delayed without injury to the city. The city electrical engineer is 'in London waiting to arrange contracts for plant machinery, but the loan drags and until the flotation is assured nothing can be done. That there is "not enough money to go round" among the - local bodies of New Zealand is not a sufficient reason why Auckland should remain without enough electricity to go round. The Prime Minister cannot let- the matter rest at a mere appeal to local bodies to defer the less urgent works. He should so classify the loans and so adjust the rate of interest, that essential works can proceed without further delay.