REPAYMENT OF A LOAN.

New Zealand Herald, Volume LXVI, Issue 20364, 19 September 1929, Page 9

REPAYMENT OF A LOAN.

EDUCATION BOARD FUNDS.

INTEREST TO BE WITHHELD.

DECISION OF THE DEPARTMENT.

A proposal by tho Education Department not to pay tho interest on a loan of £9328 received from tho Auckland Education Board in 1922 and to attach certain conditions to tho repayment of the principal led to strong criticism of the business ethics of the department at a mooting of the board yesterday. When apprised of tho department's proposed action, members voiced a unanimous protost against what was described as "not playing the game." In its letter tho department stated that tho Cabinet had approved repayment of the sum of £9328 advanced by tho board from its rebuilding fund in 1922 for the purchase of a hostel for the Auckland Training College. "The interest has not been included, although it was mentioned in tho Order-in-Council empowering tho loan," continued tho letter. "Under the circumstances, seeing that tho board's rebuilding fund was provided directly by the Government, and since tho passing of the Education Amendment Act, 1921, tho fund can be expended only with tho prior consent of the Minister of Education, tho department considers it reasonable that (he board should forgo any claim for interest. So far as rebuilding monies are concerned, the interests of tho board and tho department aro identical. Further, tin.: department can sco that no good object can bo obtained if tho refund were paid from the public account to tho board's rebuilding account as such monies can be spent only with the Minister's approval." The department requested the board to approve of tho expenditure of tho amount on some of its most urgent building requirements, applications for which had been submitted. Tho department prcfcired this method to tho 'expenditure of tho whole sum on some largo rebuilding work, such as at Parnell or Richmond Road.

"Not Pleasant Reading,"

"This makes not very pleasant reading," remarked the chairman, Mr. A. Burns, 110 said about seven years ago there had been numerous representations from parents in the country for a hostel to which girls attending the Training Collego might bo sent. At the time money and building material were scarce and the board had offered to lend the department the purchase price of a hostel, from its accumulated rebuilding fund. The money was lent at 5 per cent, interest and acknowledgment was made. Mr. limns said the department now intended to confiscate tho money. It could not bo used for other than school purposes, but tho board should have leen given tho opportunity to spend it. Tho board had expended the fund wisely in the past, having offered tho department half the cost of new buildings, such as the Napier Street school. The board had acted generously wit h the department and had never pressed for the money, realising the calls made upon it. It would bo more graceful for the department to hand over tho money and suggest how it might be spent. It should not go into the general fund.

"It is time that we asserted our rights as a board," said Mr. 11. S. W. King. "Wo lent the money to tho department at a time of financial stress. In my opinion it was a business contract. While admitting that the money was borrowed, the department is now laying down the method or spending it, explaining that in any case tho Minister's consent would have to bo obtained."

The Question of Interest.

"That is an idea of recent years; formerly the Minister's consent was not needed for the spending of inonej from tho fund," said Mr. Burns. "It is not playing tho game," said Mr. King, suggesting that a strong protest should be made. Mr. T. U. Wells said the simple interest on the principal at 5 per cent, amounted to over £3030. It was a breach of contract to ask tho board to forgo the amount. Tho department should surely set an example in business ethics. Mr. E. C. Banks said the department should ho requested simply to pay the money back to tho board's rebuilding fund. Mr. Burns said the department s action appeared to bo confiscation. Formerly the department inndo an annual grant for rebuilding purposes and it was from the accumulated fund that tho money had been lent. He doubted the wisdom of tho board in allowing any accumulation. It was decided to reply to tho department stating the position from tho board's point of view.