LOCAL BODY FEARS

New Zealand Herald, Volume LXIX, Issue 21349, 25 November 1932, Page 13

LOCAL BODY FEARS

EFFECT OF AN' INCREASE

STOPPING RELIEF WORKS

PROSPECT OF TRAMWAY RATE

The consequences to Auckland local bodies of an increase in the rate of exchange to 25 per cent were viewed with the gravest concern at a local body conference held at the Town Hall yesterday. It was predicted that in the event of inflation proposals being put into effect, the City Council would be compelled either to increase the municipal rates by 2d in the pound or instantly bring about the cessation of all unemployment relief works. The Transport Board would be

obliged to levy a tramway rate over the whole of its district, while drastic measures of a nature not disclosed would have to be resorted to by the Harbour Board.

''Jf the exchange is pegged at 25 per cent I would be compelled to recommend the City Council to cease its unemployment expenditure immediately," said th» Mayor, Mr. G. W. Hutchison. "An "additional 15 per cent added to the present exchange rate of 10 per cent means the City Council will have to add £22,500 a year to the annual interest bill on its overseas commitments. To find that extra £22,500 is more than I am prepared, in our present serious difficulties, to ask the council to do. It would mean increasing the city rate by 2d. and it needs no imagination to realise what a detrimental effect that will have when you know that many of our ratepayers are unable to pay the present rates." Cost of Unemployment Mr. Hutchison added that something would have to be done to avoid an increase in the rates, and lie saw nothing for it but to take the extremely serious and undesirable step of stopping unemployment relief works, which would mean throwing an added burden upon the Unemployment Board. Unemployment was at present costing the City Council £II,OOO a year, which was 15 'per cent more than the council had budgeted for, the number of men employed on works having increased from 800 to" 1100 since the beginning of the year. Mr. J. A. C. Allum, chairman of the Transport Board, said an increase in the exchange rate would wipe out all the economies that had been effected in connection with reduced capital charges. The present exchange rate of 10 per cent forced the Transport Board to find aa extra £BOOO a year to add to its annual interest bill; a 15 per cent increase would compel the board to find an additional £12,000 a year, making a total of £20,000 a year for which no benefit was received.

''Our troubles are increasing," said Mr. Allum. "In the last few weeks there has been a decided deepening of the depression, which we have felt in our revenue. It means this, that if we are compelled to find this extra money it will be absolutely impossible for the Transport Board to stick to its determination not to levy a rate." Crippling Port Activities Mr. G. R. Hutchinson, chairman of the Harbour Board, said that although five members of the board represented country districts, as Harbour Board members they could have only one voice. The proposed increase in exchange would cripple the board's activities. It was at present paying £6200 a year on account of exchange; it would have to find an additional £9300 in the event of the proposed increase taking effect. In addition, the board had £240,000 of loan money- falling due in London on January 10. As things were at present, an extra £24,000 would have to be sentj but if- the exchange was increased to 25 per cent the sum to be found would be £60,000, an increase of £36,000. The Harbour Board would be injured further by the reduction of imports which would follow, for two-thirds of the board's revenue was derived from imports and only one-third from exports. What steps would have to be taken to meet such a serious position he was disinclined to say; that they would be of a very drastic character could be expected. Position of Power Board

Mr. W. J. Holdswortli, chairman of the Auckland Power Board, said that while he appreciated the difficulties confronting the farmers, it needed emphasising that the industrial and commercial community were equally emIm'rassed, and relief for one section of the community, should not be afforded directly at the "expense of another. Moreover, an increased exchange rate would be a direct violation of the Ottawa agreement.

The present exchange rate involved tha Power Board in an annual expense of £IO,OOO, said Mr. Holusworth; an increase of 15 per cent would force the board to find an extra £15,000. In addition, other commitments, including a maturing loan in London next March, would involve the payment for exchange of some £30,500, increasing to £76,250 in the event of the exchange rising to 25 per cent, an increase of £45,750. Altogether, therefore, the Power Board would be. called upon to pay over £IOO.OOO in exchange, or £60,000 more than it was paying at present. There was only one way to meet such a situation, said Mr. Holdswortli, but it was for the board, not for him, to say. His connection with the Local Government Loans Board made him acquainted with the negotiations which were proceeding for the repayment of loans falling due shortly in London. The sum required to be found for exchange by all New Zealand local bodies who found themselves in that position would be staggering. Mr. W. F. Stilwell, Mayor of Mount Albert, and Mr. W. H. Nagle, chairman of the Finance Committee of the Mount Eden Borough Council, also outlined their councils' position. No Relief lor Unemployed In answer to a question, Mr. Hutchison said the Drainage Board*and the Hospital Board would also be effected by ail increase in exchange. There was also the question of the importation of supplied and materials for local body requirements. These would all cost more if tlie exchange went up further. If the economists could show him that the uitem'ployed would be absorbed in agriculture as soon as the rate went up he would not oppose the increase, but ho was of the opinion it would make not the slightest difference for a long time to come. Any benefit the country received would take a long time to reach the towns, and in tho meantime they would be overtaken by disaster.

It was decided that Mr. Hutchison should send the following resolution to the Prime Minister:—:"l have been requested by a conference of Auckland local body representatives to convey to you their strong opposition to the proposal to increase the exchange. An increase to 25 per cent would add an additional annual cost on remitting interest of £58,b00; on other overseas commitments, £81,750, besides increased cost of imported materials. It is strongly represented to you that the citizens are unable to bear this additional burden, and an earnest appeal is made that the Government refrain from interference in tne exchange rates." Uelcerams of a similar purport were sent to the Auckland members of Parliament and to the chairman of the Bank of New Zealand. fljH