POWER BOARD LOANS.

New Zealand Herald, Volume LXV, Issue 20132, 18 December 1928, Page 10

POWER BOARD LOANS.

Asked by the Electric-Power Boards Association for an opinion on the 3 per cent, sinking, fund which it was suggested the Local Government Loans Board had adopted as a standard for supply authorities, the Auckland Power Board yesterday gave the principle endorsement, without including the actual figure. From the tenor of the discussion it appears the board supported the ideal of liquidating loans at maturity, a proceeding that has already been described as Spartan, especiallj when combined with the full maintenance of assets out of revenue. Various aspects of this policy have been discussed previously. At this stage it is enough to dwell for a moment on the immediate consequences of living up to the ideal. Certainly it assures for the supply authorities a position of magnificent strength in the future, the capital cost of its plant entirely met, and the effects of depreciation provided for fully. The only question is whether the amount of the tax this places on the consumer in the meantime could not be lightened with advantage. Since power supply is a public undertaking the eventual benefit of liquidated loans must be intended for the consuming public.. A mitigation of the load the provision of such high sinking funds now places on industry, primary and secondary, might conceivably be just as beneficial as the lightening of it to a greater extent later. To put it another way, there is much to be said for cheapened power now, aB against power cheapened even more in the future Certainly loans should not bo raised without any provision for repayment, but the margin between that lack of foresight and the 3 per cent, sinking fund on which the discussion was based is great enough to raise the question whether there is not a reasonable mean between two extremes. Power cheapened to the furthest limit that prudent finance will permit would be the greatest boon the country could be ffiven by its public supply system Repayment of loan money by a 3 per cent sinking fund is more than prudent finance demands, and the Auckland Power Board would have done no. harm if it had said so in reply to the correspondence before it#