LOCAL BODIES' LOANS.

New Zealand Herald, Volume LXIII, Issue 19320, 6 May 1926, Page 8

LOCAL BODIES' LOANS.

The emergency measures of the war period included an elaborate system of regulating borrowing by local authorities, under which loan proposals were made subject to the approval of the Governor-General-in-Council, and a check was imposed upon the rates of interest that might be paid by borrowing authorities. That procedure has been continued, but it. has become merely a formality. There may have been cases during the last few' years in which the Government has exercised its veto, but generally sanction is given to all applications that comply with routine requirements, and the only result is that the administrative work of local and departmental officials has been increased and that the Gazette is encumbered with a mass of stereotyped notifications. That the cost of these formalities is simply wasted is apparent from a return published by the Government Statistician. The original purpose of the Government's supervision was to prevent excessive borrowing by local bodies as a whole; restriction in this respect would normally be advisable. The actual result has been the accumulation of authorities amounting to many millions. A year ago there were unexpired and unexercised authorities totalling £11,835,657 ; in the nine months from April 1 to December 31, sanction was given for further loans totalling £5,057,668, making a total of £16,893,325. In the latter period authorities for £232,453 were cancelled or expired, amounts totalling £1,268,126 disappeared from the return without explanation, and the loans actually raised totalled £4,425,279. There remained at December 31 active authorities totalling £10,967,467. This figure presumably includes provision for long programmes sanctioned by statute, but the bulk of the amount must represent proposals for current capital needs. Consequently, unless a large proportion of these authorities has actually expired through the abandonment of the schemes for which the Government's sanction was sought, local bodies might at any time flood the market with ten millions worth of debentures. In his last Public Works Statement, Mr. Coatcs declared his conviction that "a much closer and more expert examination" is required before loan proposals are approved, and announced that legislation would bo introduced this year to constitute a board to which all applications would be referred. Provided that this board made its investigation and issued its judgment on proposals before their submission to ratepayers, its expert advice would be of great national value. But until it has inaugurated an effective system of supervision, the Government might well consider the advisability of abolishing the present method as being of Vfctle practical use and costing far more than it is worth.